Mumbai, Oct. 25: Some leading brokerages are betting on the Sensex crossing the 22000-mark. The BSE bellwether had crossed 21000 yesterday in intra-day trade but it failed to hold on to the gains.
Deutsche Bank today raised its year-end Sensex target to a record high of 22000, while Angel Broking forecast the 30-share index to touch 22600 in the coming months.
The Sensex had scaled 21039.42 points in intra-day trade on Thursday. However, it could not sustain at these levels and closed at 20725.43 as investors turned cautious ahead of the monetary policy next week.
In today’s trading, the benchmark index ended at 20683.52, a drop of nearly 42 points.
Deutsche Bank said investor pessimism seen earlier this year was receding amid positive developments such as the good monsoon.
“We are raising our December Sensex target from 21000 to 22000 premised on our expectation that the pace of negative news flow over the country and excessive investor pessimism may be receding,” it said in a note.
The bank said stability in the rupee, declining gold imports, rising exports and postponement of the tapering in the US had imparted considerable legitimacy to the government’s commitment to contain the current account deficit.
The best monsoon in 15 years is expected to accelerate recovery in the rural economy, which accounts for 56 per cent of the total income and 64 per cent of the total expenditure.
Angel Broking, too, feels the better macro situation, apart from the return of foreign institutional investors, will support equities.
“We expect the Sensex EPS (earnings per share) to post a growth of 9.6 per cent in 2013-14 and a healthier 15.4 per cent in 2014-15. Attributing a 15x multiple to our Sensex EPS (in line with the 5-year average), we arrive at a target of 22600 for the Sensex, implying an upside of 8.8 per cent from the present levels,” it added.