Rise of Narendra Modi Ji – BSE Sensex & Nifty Targets 2014 2015

Shri Narendra Modi, led BJP has emerged Victorious beyond expectations decimating the Corrupt & Paralyzed Congress which killed the Indian Economy. This is a decisive electoral verdicts since 1984 with the pre poll NDA alliance surpassing the most optimistic forecasts. The political platform now delivered to the NDA is historic and should result in a simultaneous revival of investor, consumer and corporate confidence. With the economy and the investment cycle at the center focus of the new government, equity markets are likely to react to the verdict with euphoria.

India is entering its fourth wave. In the previous three waves, more than two-thirds of all stockmarket returns have come in the first three years.

While the budget will now emerge as the next key milestone for the market, investors should begin to assess what the next government is likely to do.

Deutsche Bank in a Research report wrote,

We are raising our December 2014 Sensex target to 28,000 (implying a multiple of 18x on FY15 EPS) and strongly believe that we are at the cusp of a structural bull market. The Indian market tends to give a new government the benefit of hope and hence we strongly believe that the market is unlikely to consolidate meaningfully until the budget.

FII Research entity Ambit Capital in a report said,

Given that the BJP’s majority will almost certainly lead to elevated expectations on economic reform, we raise our trailing P/E target from 17.0x to 20.0x. This combined with a FY15 Sensex EPS estimate of Rs1,500 (implying 14% YoY growth) leads to our new end-FY15 Sensex target of 30,000

UBS Equity REsearch in a report said,

Based on our top-down expectation of 15% earnings growth in FY16, and 15x PE, we set our Nifty target for end-2014 at 8000. There could be upside to this target based on how policy making evolves over next few months, which could flow through to earnings estimates and multiples higher than average.

Goldman Sachs in a Report Wrote,

We expect GDP growth to pick up from 4.6% in FY14 to 6.5% yoy in FY16. Earnings outlook has significantly improved, particularly for the domestic sector, and we expect an upgrade cycle to start soon. We forecast 14% and 17% EPS growth for this calendar year and next (2-3% above consensus). Valuations are mid-range at 15.5x and should be sustainable during a cyclical recovery. We reiterate our Overweight stance on India and raise our 12 month NIFTY target to 8300

We are Overweight on the following sectors: Banks, Energy and Industrials. We also highlight earnings upgrade candidates and mid-cap cyclical ideas.