The day does not look far when the Nifty50 is likely to hit a five-digit number for the first time. The journey, so far, also sends out a clear message to investors that one should not worry much about the ups and downs of the financial world and stay invested.
After hovering at four-digit level for the past two decades, the 50-share index looks poised to cross the psychologically important 10,000 mark this financial year on likely recovery in earnings and political stability.
The index, which was trading above the 6,000 mark before the global financial crisis of 2008, had slipped below the 3,000 level in November 2008. However, with an improving economy, investor sentiment and liquidity flows, the index managed to take U-turn.
The equity index recently crossed the 9,200 mark for the first time ever after the BJP, led by Prime Minister Narendra Modi, won elections in the most populous state Uttar Pradesh. The NSE Nifty closed at 9,218 on March 20.
VK Sharma, Head of Private Client Group (PCG) at HDFC Securities, said the Nifty50 can touch 10,800 by the end of March 2018 on ample liquidity from local as well as foreign investors (FIIs), stable inflation, a strong local currency and a shift in the political narrative from caste/creed to development and growth. Improvement in consumption will also support sentiment, as the young demography demands better quality of life.
G Chokkalingam, Founder of Equinomics Research and Advisory, expects the 50-share index to rise around 15 per cent in next 12 months. “With government’s efforts, both GDP and corporate earnings should get some lift in coming quarters,” he said.
The rupee hit its highest level in over 16 months at 65.36 to the dollar on Monday. Market experts have forecast further appreciation in the local currency in the days ahead.
On an average, the rupee has depreciated around 4 per cent every year in recent times. However, Sharma of HDFC Securities expects the domestic currency to remain stable this year with a slight bias towards appreciation.
“India among the fastest growing economy and recent state election victory gives government mandate for reforms. Expectation of higher foreign fund flow along with good forex reserve will further boost the currency in coming months,” he said.
He feels the rupee can appreciate to 62 against the dollar by the end of next financial year on robust FDI and FIIs inflows in the coming months.