Nomura Holdings Inc: Sensex to touch 30,310 points by August 2015

MUMBAI: Nomura Holdings Inc, Japan’s biggest investment banking and brokerage group, has forecast that the BSE’s benchmark index, the Sensex, will soar 17 per cent from its current levels in a year from now.

It said the index will touch 30,310 points by end of August 2015 as growth momentum intensifies in the medium-term on the back of ongoing efforts of the new government to revive growth. It also said that the markets may get re-rated going forward on account of falling inflation and rising growth momentum.

The brokerage said the market’s earnings multiple is still not expensive as earnings multiple are trading around 15 times compared with historical averages of 14.9 times to five-year average multiple and 14.1 times to three year average.







It cited stocks such as Axis Bank, ICICI Bank, State Bank of India, GAIL India, Coal India, Tata Motors, L&T and HCL Tech as top picks.

Nomura has also upgraded its ‘underweight’ stance on auto, infrastructure, construction and capital goods to ‘overweight’. The brokerage expects a 12 per cent compouned earnings growth between 2014-15 and 2016-17 against Street consensus of 15.5per cent.

The Japanese brokerage house has a bullish stance on rate cyclicals because it expects inflation to surprise positively in the coming quarters on fiscal consolidation, stable currency and normalisation of seasonal food prices.

Nomura said sequential growth momentum has been on the rise since the beginning of this year for a number of demand and supply-side indicators. Data shows significant improvement in sequential momentum in production of coal, cement, electricity and steel over the past few months.