When will BSE Sensex hit the 1 lakh milestone? Market analysts and experts are optimistic about the Indian equity markets scaling new highs with the Narendra Modi-led NDA government retaining Nirmala Sitharaman as the Finance Minister. During her first tenure as India’s Finance Minister, the Sensex experienced a remarkable 93% jump!
According to an ET analysis by Nikhil Agarwal, when Sitharaman initially assumed the role of Finance Minister on May 31, 2019, taking over from Arun Jaitley, the Sensex was hovering around the 39,700 level.On Monday, before the portfolio allocation was announced, the index reached a lifetime high above the 77,000 mark.
Market experts have now set their sights on the much-anticipated 1 lakh milestone for the Sensex. Anand Rathi’s predictions suggest that this target could be achieved by the end of FY28. Additionally, market guru Raamdeo Agrawal recently forecasted a level of 1.5 lakh by 2029, which appears attainable if the Sensex maintains a 15% annual compounding rate and earnings growth supports the current P/E levels of 25x.
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Incidentally, Mark Mobius, the renowned billionaire investor, maintains a positive outlook on the Indian stock market‘s potential for growth, irrespective of the Narendra Modi-led NDA’s weaker mandate in the Lok Sabha election results of 2024.
During an interview with ET, Mobius was questioned about his previous forecast of the Sensex reaching the 1 lakh mark within the next five years. He reaffirmed his position, stating, “We are still on that upward trajectory. There will always be corrections, but we are still in that direction. We will hit that (1 lakh mark for Sensex). Maybe even before five years. India may be an exception in terms of moving faster.”
Mobius’s confidence in the Indian market’s ability to reach new milestones remains unwavering, even suggesting that the Sensex could potentially hit the 1 lakh mark earlier than initially predicted, given India’s remarkable growth rate.
Under Sitharaman’s leadership, the stock market achieved several significant milestones, including surpassing the $5 trillion market capitalization mark and witnessing the number of demat accounts exceed 15 crore. Notably, retail investors demonstrated their strength by absorbing most of the selling pressure from foreign institutional investors (FIIs).
The continuity of key ministries such as Defence, Home Affairs, Road Transport, Finance, and External Affairs, with the same BJP faces as in the previous term, has been positively received by analysts.
Nomura analysts believe that with Sitharaman’s reappointment, the emphasis on infrastructure and ongoing fiscal consolidation should persist. They noted that following the election outcome, investors were primarily concerned about political stability and policy continuity. However, over the past week, these concerns have diminished, and the cabinet composition suggests policy continuity at present. Nomura anticipates an improvement in FII flows as policy continuity is established.
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Goldman Sachs analysts expect the new government to adhere to the fiscal consolidation path while maintaining a focus on infrastructure development through the expansion of the rail network, along with a slight inclination towards increased rural spending.
Deven Choksey, a seasoned market expert, considers Sitharaman’s reappointment as India’s finance minister in the new coalition government to be “definitely a wise step” in terms of maintaining the emphasis on infrastructure development and exports.
Phillip Capital has maintained a positive medium to long-term outlook on Indian macro and equities, stating that the seat distribution demonstrates optimal continuity and fair treatment of allies, which is a significant advantage. The brokerage anticipates the likelihood of incrementally positive/strong FII flows alongside robust domestic flows, given the experienced individuals leading key ministries in the coalition’s third term.
The Union Budget, expected to be presented in July, will be the next significant event for investors. “The full budget in July will shed more light on the possibilities and scope of each ministries. Social inclination is widely anticipated however along with continuity in capex and earlier policies and reforms,” the brokerage said.