Edelweiss Equity Research Projects that Indian market will Hit a new High on the basis of
Technicals as well as
Fundamentals.Technical AnalysisAccording to current technical setup, the Nifty has formed a decisive low at 5580 post the RBI policy meet on Oct. 30. The index has been consolidating between 5550 and 5720 since mid-September. During this period, it has formed a sideways pennant, which has given a breakout on Friday (Nov. 2). This has a measured move target till 6000. However, the index is in the process of forming a higher high, higher low pattern, depicting typical bull market characteristics. We expect the Nifty to gradually move towards new all-time highs from the current levels over the next few months.
Fundamentals of Indian MarketAt the current levels, the Sensex trades at a PE multiple of 15.1x FY13E EPS of INR 1260 and 13.3x FY14E EPS of 1430. Historically, Indian markets have traded at valuations of 15.5x one-year forward. Assigning the average multiple of 15.5x, we arrive at a March 2013 target of 22,000 for the Sensex, or 6800 on the Nifty, an upside of 18% from the current levels.
