 "Sensex hits 76,000: What’s behind bull run? When will indice hit 1-lakh mark?")
The Sensex and Nifty both hit record highs on Monday.
The 30-share BSE Sensex rose 599.29 points to an all-time peak of 76,009.68 during the afternoon trade, while the NSE Nifty shot up 153.7 points to hit a new lifetime high of 23,110.80.
The development comes just a week ahead of the results of the 2024 Lok Sabha polls.
IndusInd Bank, Axis Bank, HDFC Bank, Larsen & Toubro and ICICI Bank were big gainers on Sensex today.
Wipro, NTPC, Maruti and Mahindra & Mahindra were among the laggards.
Friday witnessed Foreign Institutional Investors (FIIs) offload equities worth ₹944.83 crore.
The BSE benchmark had dipped 7.65 points or 0.01 per cent to settle at 75,410.39.
The Nifty breached the 23,000 mark for the first time on Friday.
It, however, pared all the gains and ended with a marginal decline of 10.55 points or 0.05 per cent at 22,957.10.
Some experts say that this is just the beginning – that the 1 lakh is within reach for the Sensex.
But why is the stock market hitting fresh highs? And when do experts think the Sensex will cross the 1-lakh mark?
Let’s take a closer look:
Why is stock market hitting fresh highs?
Impact Shorts
View AllIt seems that investors are optimistic about the results of the ongoing general elections – set to be declared on 4 June.
Prashanth Tapse, senior VP (Research), Mehta Equities, told Moneycontrol that investors markets have been boosted by investor confidence a general drop in oil prices.
As per Hindustan Times, domestic institutional investors purchased Rs 2,320 crore worth of stocks.
The Indian stock market was doubtlessly helped by the Asian markets of Seoul, Tokyo, Shanghai and Hong Kong trading in the positive territory.
Wall Street also ended with gains on Friday.
Global oil benchmark Brent crude climbed 0.13 per cent to $82.23 a barrel.
Experts said they see a short-term upside.
Neeraj Chadawar, head of fundamental and quantitative research at Axis Securities, told Business Standard: “If the election outcome aligns with the current market expectations, we expect the Nifty 50 to reach fresh new highs in the first week of June. We recommend investors stay invested in the market and but also maintain good liquidity to take advantage of any market dips.”
Business Standard cited several factors as being responsible for this bull run including India’s economic growth, rising industrial production, manufacturing, and government spending on infrastructure.
Dr Ravi Singh, SVP, Retail Research, Religare Broking, told Livemint, the Dow Jones and NASDAQ hitting all-time highs, rate cuts expectations from the US Fed and other major central banks and India’s strong GDP numbers also contributed to the positive upswing.
“The government’s capital spending initiatives and strong manufacturing activity have contributed to this phenomenal run. Additionally, policy continuity after the general election and continued focus on infrastructure development are expected to sustain India’s economic growth,” Singh told the outlet.
What do experts say?
Experts also said that the Sensex is likely to hit the one lakh mark between 2025 and 2029.
Business Standard quoted investment guru Mark Mobius as saying that the Sensex could hit 100,000 in five years.
“I think the Sensex will go to 100,000 in the next five years easily… But there will be corrections on the way,” Mobius said at the Morning Star Investment Conference 2023.
“Over the longer term, I believe you are talking about 14-15 per cent returns for India," Mobius told The Times of India recently.
Mobius said it is important to keep a long-term outlook.
“At the end of the day, you are going to be getting a lot of long-term money, not only in the equity market, not only in the fixed income market, but in direct investment in manufacturing and distribution and other areas. India is a huge market and there are lots of opportunities for global investors. They are going to take advantage of that opportunity.”
“India’s economic growth is impressive, positioning it as the world’s fastest-growing major economy, outshining even China in terms of growth projections. Considering all these factors we can see Sensex breaching the 1 lakh mark in the next 5 years,” Singh told LiveMint.
Others think it is likely to happen even sooner.
Hiren Ved, director and chief investment officer of Alchemy Capital, told Moneycontrol that the 1-lakh mark will likely be reached by Christmas 2025.
“Between Diwali and Christmas 2025, it is possible for the Sensex to hit 1,00,000,” Ved said. “By the next financial year, IT and banks will take leadership.”
Some are even more bullish.
Business Standard quoted Morgan Stanley as writing in its research note entitled “Is the Market Overbought?” that the Sensex could touch 86,000 by the end of 2024.
Businessman Raamdeo Agrawal, chairman, Motilal Oswal group, noted in a piece in The Times of India that the Sensex in five years shot up from 37,500 to 75,000.
This, he noted, works out to a compounding of 15 per cent – nearly the same as the 45-year compounding rate from 1979 to 2024.
“India’s corporate sector profit has compounded at almost 17 per cent over the last three decades. It is reasonable to expect 15 per cent corporate profit growth going forward. If current P/E levels of 25x are maintained, this too translates to the Sensex compounding of 15 per cent i.e. double every five years. In other words, the Sensex level of 1,50,000 around the year 2029,” Agrawal wrote.
Agrawal cited India’s retail equity boom as a major reason this is possible.
“This retail equity boom is doing a couple of things. One, in the primary market, it is flooding the Indian corporate sector with liquidity to be invested for growth. Two, the boom in the secondary market is translating into wealth-effect-led consumption, further supporting GDP growth,” he noted.
Still, others sound a note of caution.
Business Standard quoted Morgan Stanley as warning that the Sensex could drop to 51,000 by the end of 2024 is India sees a hung Parliament or if a new government takes over.
With inputs from agencies
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