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This article is more than 1 year old.

Morgan Stanley sees Sensex hitting 50,000 levels by December 2021

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Brokerage house Morgan Stanley expects the benchmark Sensex to hit 50,000 levels by December 2021.

Morgan Stanley sees Sensex hitting 50,000 levels by December 2021
Brokerage house Morgan Stanley expects the benchmark Sensex to hit 50,000 levels by December 2021 provided there is stability in the current virus situation and a recovery in the economy. This is a base case scenario, according to MS, with a 50 percent profitability.
The brokerage said that the coming growth cycle is not fully priced in, by its calculations – thus, it sees more upside to the index. Earlier, the brokerage had a target of 37,300 for June 2021.
The rise in the Sensex target is on the back of a pickup in economic activity and peaking of the COVID-19 infections.
"COVID-19 infections appear to have peaked, high-frequency growth indicators are coming in strong, government policy action is beating expectations, and Indian companies are picking up activity through the pandemic," the brokerage stated in the report.
It expects growth to surprise on the upside and hence has raised its 2021, 2022, and 2023 EPS estimates for the BSE Sensex 15 percent, 10 percent, and 9 percent, respectively.
As per MS, the Indian markets remain in a bull run that started in March, and even though one should expect corrections along the way, the
equity market may have more legs before it tops out.
Further, it sees the broad market SMIDs (small and mid-caps) beating the large caps in 2021.
The brokerage thinks portfolio returns are more likely to be driven by bottom-up stock picking rather than top-down macro forces.
Among sectors, it expects domestic cyclicals to outperform exports,
with rate-sensitive stocks and consumers outperforming whereas energy underperforming.
It added another 100 bps to Financials at the expense of Healthcare and also added SBI to its Focus List while removing Apollo Hospitals. MS remains overweight on Consumer Discretionary, Industrials, Financials, and Utilities. However, it is underweight on Technology and Energy sectors.
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