Equity market has run its course; 9% fall in near-term likely: Bofa

A Wall Street brokerage has warned of a 9 per cent near-term correction for the equity market, saying the “street has only limited runway to continue the rally” that began in the second half of last year.

The benchmark index Sensex has added a whopping 6,000 points since January and touched 56,000 on Wednesday.

Following the pandemic, the stock market tanked over 35 per cent in March 2020. It has rallied over 118 per cent since then and after scaling 50,000 in January, the Sensex has peaked the 56,000-mount. "We expect the markets to correct nearterm to the tune of 9 per cent. Our Nifty target is 15,000 by December implying a 9 per cent potential downside near-term," analysts at Bank of America Securities India said.

"Our analysis of the past market rallies suggests that the current rally — over 118 per cent in the past 73 weeks — could have limited further runway. We see the risks of estimate reductions and with peak valuations, and expect the markets to correct 9 per cent near term with our Nifty target at 15,000 from the current levels," they said.