NEW DELHI: India’s equity market is now nearly 5% away from its all-time high as benchmark indices - Sensex and Nifty - closed at a four-month high on Thursday. Sensex rose 515 points to close at 59,332, while Nifty ended the day 106 points higher at 17,640. While the BSE Sensex had hit its all-time high of 62,245 in October last year, the Nifty peaked at 18,604 around the same time. After falling sharply in early May, the two indices have seen a sharp rebound of nearly 17-18%, backed by favourable global as well as domestic factors.
To begin with, a less hawkish stance by the US federal reserve on future rate hikes in its latest meet, falling commodity and crude oil prices, which are easing inflationary pressure, a better-than-expected Q1FY23 earning reported by India Inc and sustained foreign fund inflow since late July is contributing to the present rally.
However, few global brokerages are not very optimistic and expect a major correction in near future. Brokerage BofA Securities on Thursday hinted toward more pain in store for investors in Indian equities with a call for the benchmark indices to correct 10% by December 2022.
The brokerage said Nifty will be at 15,600 points by December 31, 2022. BofA’s estimate comes after Jefferies predicted a correction of 15% (Nifty) if there is a mean reversion of the spread between bond yields and earnings yields. “We remain cautious on markets on the current volatile environment and looming global recession concerns as reflected by consensus downgrading Nifty FY23/24 earnings,” BofA analysts said in a note.