ETMarkets survey: Whale of a Samvat ahead! Sensex on course to hit 36,000

NEW DELHI: Tighten your seat belts! The domestic market promises some exciting times ahead in the forthcoming Hindu accounting calendar 2073.

As many as 15 top brokerages, which participated in the Samvat survey of ETMarkets.com, have projected the BSE benchmark Sensex to reach anywhere between 32,000 and 36,000 levels by next Diwali. That would mean anywhere between 15 per cent to 29 per cent jump from Thursday’s closing 27,915.

The BSE barometer last hit its all-time high of 30,024 on March 4, 2015. If the index manages to reach the upper band of the poll estimates, it would be 20 per cent above the 2015 peak.
No one among the participants gave an index target below the 31,000 mark. Analysts largely cited improved earnings expectations behind their bullish views.

Marketmen are forecasting 16-18 per cent earnings growth in FY18. At present, the Sensex is trading at about 18 times its forward earnings, which is just above the historic average of 15 times.

Nilesh Shah, MD at Kotak Mutual Fund, has projected a much higher level for the index by the next Diwali.

Saravana Kumar, Chief Investment Officer at LIC Mutual Fund, expects the stock market to generate returns in tandem with earnings growth. “Improving bank balance sheets are expected to boost earnings growth. Corporate earnings should grow around 14 per cent in FY2017 and even faster in FY2018. We would not be surprised, if the Sensex crosses the 31,500 mark by next Diwali,” Kumar said.

Dinesh Thakkar, CMD, Angel Broking, has a target of 31,554 for the Sensex. Siddhartha Khemka, who heads equity research (wealth) at Centrum Broking, expects the Sensex to be in the range of 32,000-33,600 by next Diwali.

Anand James, chief strategist at Geojit BNP Paribas, has pegged his Sensex target by next Diwali at 32,000-36,000.

Kotak Securities foresees the Sensex at 33,000 and the Nifty50 at 9,300, while ICICIDirect sees the BSE benchmark at 31,000.

“We expect Sensex earnings to grow 16.4 per cent and 17.5 per cent in FY17E and FY18E to Rs 1,600 and Rs 1,880, respectively. We have assigned a PE of 16.5 times on FY18E EPS to arrive at a one-year forward fair value of 31,000 for the Sensex. Corresponding target for the Nifty would be 9,400,” Pankaj Pandey, head of research at ICICIDirect, said.

Samvat 2072 began on November 11 last year. That day, the Sensex had closed at 25,866 level. At Friday’s close, the index is up 8 per cent for the Samvat year. The BSE market capitalisation today stands at an all-time high of Rs 114 lakh crore. This year Diwali falls on October 31, 2016.