Foreign brokerages see lukewarm growth for mkts
MUMBAI: Foreign brokerages are forecasting tepid growth for the markets in 2017, citing uncertainties that cloud the outlook.
Deutsche Bank on Tuesday set its December target for the Sensex, the benchmark index of the Bombay Stock
Exchange (BSE), at 29,000 points, on the strength of a likely recovery in the later part of the year.
The Sensex ended trading at 26,899 on Tuesday.
UBS Securities’ India arm has projected an end-2017 Nifty target of 8,800 points. The Nifty ended at 8,288.60 on Tuesday.
Citigroup analysts on Monday maintained their September target of 30,000 for the Sensex.
In a note on Monday, HSBC said it was overweight on India in the regional context, and has a Sensex 2017 target of 30,500 points, saying that the key is for Asia’s third-largest economy to continue to push tough structural reforms.
Much will depend on the Union Budget, which will be unveiled on February 1.
“Unless the Budget surprises positively with a taxinduced fiscal stimulus, the market is likely to mirror the movement seen in the fourth quarter of 2016, with FIIs (foreign institutional investors) continuing to stay on the sidelines while locals provide buying support,” Deutsche Bank said in a statement.
FIIs have sold $4.9 billion in stocks since October, and their selling accelerated since November 8, when the government announced its demonetisation drive, and Republican Donald Trump won the US presidential elections.
Deutsche Bank analysts said the articulation of Trump’s economic policies will be the most determining global factor, particularly for liquidity from foreign institutional investors, followed by the outcome of the French and German elections, how the UK manages Brexit and the path of the Chinese yuan.
A stronger dollar has played havoc and led to a surge in outflows from emerging market assets to dollar-backed assets.
The dollar index, which is the measure of the greenback against six major currencies, has risen 3.44% since Trump’s win, and is not seen coming down in the near future.
On the domestic front, the verdict of the five state elections in March, the Budget, developments regarding the roll-out of the goods and services tax (GST) and other executive actions will affect earnings and sentiments.