Highlights: Market pundits are Bullish—predict Sensex to touch 61 K by Dec

• Today Markets oscillate –directionless…bumpy.
• Senses < 50 K —-Nifty hovers around 15 K
• Oil prices ..no change today in bunks
• Tata Motors reports loss: Shares down today also
• Pharma shares surge.
• Rupee appreciates @ 73.16 vs $

Reliance Retail Ventures on Wednesday approached the National Company Law Tribunal (NCLT) seeking permission to hold a shareholder meeting of Reliance Industries to consider and approve its composite scheme with Future Retail (FRL).

Sensex could hit 61,000-levels by December 2021 in a bull case scenario, said Morgan Stanley. The 61,000 levels for Sensex indicate an upside of 22 percent for the BSE frontline index from the current levels of 50,000.

Even in a base case scenario, Sensex could hit the 55,000 levels, indicating a 10 percent upside, said the brokerage house.  In the bear case scenario, it pegs the Sensex at 41,000 levels by December 2021.

In a recent note, the brokerage house stated that it is overweight on India in a global emerging markets (GEMs) context and expects Indian equities are likely to outperform their emerging market (EM) peers in 2021.

“India is a stock pickers market with ample alpha opportunity. The ongoing consolidation has only improved the return prospects going into H2 2021 which will help India beat Emerging Markets (EMs),” said MS. It prefers midcaps, large-caps, and small caps in that order. Among sectors, it likes domestic cyclical stocks followed by rate sensitives, global cyclical, defensives exporters in the Indian markets.

As per the brokerage, the immediate triggers include deceleration of the second COVID-19 wave and improvement in vaccine supply but overall it is generally positive about equity returns in the Indian indices. While corporate earnings are likely to be impacted due to the COVID-triggered lockdown and mobility curbs, markets are likely to look through this disruption, it added.

“India faces two opposing challenges – immediate shortages of vaccine supply and a medium-term problem of convincing people to be vaccinated. At the margin, the equity market will be assessing the shift in vaccine supply as a key input. Our earnings outlooks for FY22 and FY23 are unchanged from where we were at the start of the year,” the report said.

In the Base Case: It expects Sensex earnings to rise 32 percent in F2022. The government is not required to launch a fresh fiscal program thanks to the ongoing recovery in the economy but continues to pursue both administrative and legislative reforms.

In the Bull Case: The government delivers strong policy including infrastructure creation, ease of doing business and fiscal consolidation. The US dollar enters a sustained bear market, accelerating flows into EM including India. Earnings growth reaches 37 percent in FY22.

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