The Sensex could go as high as 40,000 in two years, leading brokerage CLSA has predicted. According to CLSA’s calculation based on a technical view, the Sensex potentially offers a 75% upside from current level in a 12-24 month period.
“The technical view of the recent breakout of Indian markets to new highs is that of a signal that the long-term uptrend off the 2003 low is resuming. This implies an upside target for BSE Sensex of 39,707 over the next 12 to 24 months,” CLSA said in a report.
According to the report, both fundamentals and technicals point to a positive outlook for the market.
“The technical view is aligned with our positive fundamental ‘trend-reversal’ view of India since growth recovery and below-average valuations support market upside. Fundamentally, however, we are looking at more gradual market gains, ie, around a 15% return CAGR over a two-year period,” the report said. It expects cyclicals — stocks which go up and down along with the economic cycle such as those of automobile manufacturers and metal bashers — to benefit the most in the next one to two years on the basis of both fundamental and technical factors and sees them outperforming exporters.
Last month, German brokerage Deutsche Bank had said the Sensex is likely to scale the 24,000 mark by December-end because of opinion polls pointing to sweeping victory for the BJP-led NDA in the upcoming Lok Sabha elections, lower inflation and improving global risk appetite. Japanese brokerage Nomura, for its part, has predicted that the Sensex will hit 24,700 by December 2013.
The Sensex hit an all-time high of 22,792.49 on April 10.
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