Indian stocks to rise modestly to year-end, correction unlikely
By Devayani Sathyan
BENGALURU, Aug 20 (Reuters) -India's benchmark indices will rise modestly by the end of 2024, according to a Reuters poll of equity strategists who said a correction from already elevated levels in the coming month was unlikely.
Triggered by recent turbulence in global financial markets due to the unwinding of leveraged trades funded in Japanese yen, the BSE Sensex index .BSESN dropped more than 4.7% earlier this month but has since regained 3% on expectations most major central banks will cut interest rates this year.
Breaching the 81,000 mark for the first time in July, the benchmark index of the world's fastest growing major economy is up over 11% this year, ahead of its peers. However, Indian equities, which trade at about 24 times earnings, above their 25-year average of 20, were not expected to gain much for the remainder of the year.
The Sensex was forecast to gain over 3% from Monday's close to a lifetime high of 83,000 by end-2024.
It was then expected to trade at 83,500 in mid-2025, according to the median forecast in the Aug. 9-20 Reuters poll of 25 equity analysts.
"India is becoming more of a story of resilience than outperformance. Because of valuations and somewhat moderating growth, the upside is becoming more limited," said Rajat Agarwal, Asia equity strategist at Societe Generale.
"We see lower earnings growth prospects this year compared to last year," Agarwal said. "Having said that, India remains a relatively less volatile emerging market in the context of global volatility."
When asked about expectations for corporate earnings for the rest of this year, 22 respondents were equally split over whether they would outperform or underperform expectations.
Indian companies have so far reported broadly muted earnings growth for the April-June quarter.
"With the earnings season concluded, global factors are now largely influencing market trends, with attention focused on the U.S. Federal Reserve's policy stance and the anticipated first rate cut in September," said Ajit Mishra at stockbroker Religare.
"Additionally, the ongoing geopolitical situation is contributing to intermittent corrections. Despite these factors, we believe that positive domestic signals, coupled with liquidity support from local investors, will likely limit the downside in the coming month."
A majority of analysts who answered an additional question, 17 of 23, said a correction - a decline of 10% or more - in the Indian equity market was unlikely by end-September, including four who said it was highly unlikely.
Of the remaining six, five said a correction was likely and one said highly likely.
The blue-chip Nifty 50 .NSEI index was forecast to gain 3.8% from Monday's close of 24,572.65 to 25,500 by end-year and reach 26,000 by mid-2025.
(Other stories from the Reuters Q3 global stock markets poll package)
Reporting by Devayani Sathyan; Polling by Susobhan Sarkar; Editing by Ross Finley and Tomasz Janowski
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.