Indian stocks may reach record high by end of June

India’s benchmark BSE Sensex share index will scale a new record high by midyear, according to strategists and brokers in a Reuters poll, who have upgraded their forecasts significantly from three months ago.

This more bullish view emerges from the poll despite widespread concern since the last Reuters poll over the damage a disruptive and radical government move to replace the bulk of currency in circulation may have done to the economy.

So far there is no official evidence of such damage occurring. India’s economy had grown 7 per cent versus a year ago last quarter, while the government’s ability to drive such sweeping change appears to have emboldened investors and traders alike.

Increased economic optimism coincides with a rush into global stock markets that is based in part on a view the world economy is in an upturn as well as hopes that the new US administration will deregulate finance and cut taxes.

Indian shares have outperformed major global stock indices this year, gaining over 10 per cent, and are forecast to rise another 3 per cent by midyear and a little over 6 per cent by the end of 2017 from here.

“A stable rupee and global liquidity will give more room [for] the Indian stock market to go up,” said C.A. Rudramurthy, managing director at Vachana Investments.

The Reuters poll of more than 50 equity market strategists, brokers and fund managers taken March 20-27 found the BSE Sensex is forecast to rise to a record of 30,294 in the next three months. It is then expected to reach 31,250 by the end of this year. The S&P BSE benchmark Sensex hit a record closing high at 29,910.22 and the NSE 50-share Nifty at 9,237.85 on Friday.

Similar hefty gains are forecast for the broader NSE index, which is forecast to trade at 9,300 by mid-2017 and then rise to 9,525 by December 2017. Strategists were also split whether the current stock index level is expensive, fairly valued or cheap.