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    Election outcome: Morgan Stanley expects 15% upside, Sensex target at 45,000 for June 2020

    Election outcome: Morgan Stanley expects 15% upside, Sensex target at 45,000 for June 2020

    Election outcome: Morgan Stanley expects 15% upside, Sensex target at 45,000 for June 2020
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    By CNBC-TV18  IST (Published)

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    Morgan Stanley expects a 15 percent upside from here on with June 2020 target for BSE Sensex at 45,000 and Nifty at 13,500.

    While the final votes of the 2019 Lok Sabha elections are still being counted, the trends suggest that India is voting for Narendra Modi-led National Democratic Alliance (NDA) for a second successive term with a thumping majority. The indices hit their all-time high levels in trade today with Nifty hitting 12,000-mark and Sensex crossing 40,000 for the first time ever.
    Morgan Stanley expects a 15 percent upside from here on with June 2020 target for BSE Sensex at 45,000 and Nifty at 13,500.
    "This likely continuity in administration is a source of comfort for stocks due to accompanying policy predictability. We expect some shifts in the policy regime," Morgan Stanley said in a report.
    It expects the inflation framework (low food prices and positive real
    rates), fiscal consolidation, infrastructure spending, FDI focus, and strong external affairs policies to continue.
    That said, they added that the new administration may bring some changes such as increasing cash transfers to poor people, more emphasis on portfolio flows, focus on exports, and social/constitutional reforms.
    Going ahead, the focus will now likely shift to the growth cycle.
    "Morgan Stanley expects the RBI to be more accommodative and the economy to come out of its soft patch of the past few months. Earnings could be heading into a new cycle and domestic flows should return with strength," the report said.
    The brokerage stays overweight on domestic cyclicals (both consumer and industrials) as well as financials and have added Asian Paints and IndiGo-parent Interglobe Aviation to the focus list at the expense of Adani Ports and Eicher Motors.
    However, they are underweight on defensive sectors including healthcare and technology.
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