If one goes by the latest projection given by select market players, the benchmark equity index BSE Sensex may hit the 1,00,000 mark in the next 4-5 years. The figure shows a 57 per cent upside from the record high level of 63,653.07, the index scaled on December 1, 2022. Analysts on Dalal Street believe that the domestic equity market performance in 2022 has been supported by favourable government policies.
The 30-share index has gained nearly 9 per cent on a year-to-date basis till December 1. On the other hand, some of the global indices namely Dow Jones, Nasdaq, S&P500 and Shanghai Composite indices have plummeted 5 per cent, 27 per cent, 14 per cent and 13 per cent, respectively, during the same period.
Market outlook
While sharing his views on the Indian equity market, Anil Rego, Founder and Fund Manager, Right Horizons said, тАЬSensex may cross the 1,00,000-mark over the next four to five years assuming sustainable EPS growth of 12 per cent to 13 per cent.тАЭ
He further added that markets have become less sensitive to Fed rate hikes, US growth conditions and FII selling mainly due to the persistent domestic flows a sign of a shift towards an increase in exposure to equity. тАЬMultiple levers of growth are in play such as production-linked incentive schemes, an increase in capital expenditure by corporates, growing exports and improving infrastructure which will drive the market to do better than most global peers,тАЭ Rego added.
Likewise, Amar Ambani, Group President and Head-Institutional Equities, YES Securities sees Sensex at the 1,00,000-mark in the next 3.5 years.
Data available with Ace Equity showed that foreign institutional investors have offloaded shares worth over Rs 1.20 lakh crore so far in 2022, while domestic institutional investors have bought shares worth Rs 2.55 lakh crore YTD.
Sectors to watch
So which themes to watch in the next phase of the rally? Rego said that investors can zero in on themes like banking, auto ancillary, consumer discretionary, manufacturing and building material.
тАЬDuring the rising interest rate scenario, the banking sector is benefiting and the report of strong topline growth due to healthy disbursements and higher loan rates, robust earnings growth on the back of good advances, lower provisioning for loans and expanding net interest margins (NIMs) are expected to continue,тАЭ he said.
With a rally of 141 per cent YTD, The Karnataka Bank emerged as the top gainer in the banking space. It was followed by Karur Vysya Bank (up 119 per cent), Bank of Baroda (up 110 per cent) and Indian Bank (up 98 per cent). The BSE Bankex also outpaced the Sensex in the ongoing calendar year, gaining 22 per cent YTD.
Rego further added that new launches by OEMs, rising demand and ease in availability of semiconductors are driving growth across segments in the automobile space. тАЬWe are optimistic about the sector due to the strong order book, capital expenditure plans announced by companies, growth in earnings on account of demand and softening of industrial commodities. Also, the electric vehicle segment growth is expected to be 45 per cent CAGR over the next five years, hence we are positive on auto ancillary names from the space,тАЭ he added.
The market watcher also said that the countryтАЩs per capita income crossed the important $ 2,000 mark last year and as such with rising disposable income the consumer discretionary sector growth is expected to be strong. He also believes that the building materials segment is going to be a beneficiary of the boom in discretionary spending in the next three to four years. тАЬSimilarly, due to the governmentтАЩs thrust on promoting Make in India and PLI schemes, and global players’ preference for China+1 and now willingness to look for Europe+1 on the back of rising energy costs and supply chain hurdles will make manufacturing theme as the biggest beneficiary,тАЭ Rego said.
Ambani of YES Securities is also positive on building material space and thinks that the peaking of inflation and interest rates, stabilising rupee and bond market will give direction to the market going ahead.
