Sensex Target 54,000 - BoA Merrill Lynch

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Sensex target 54,000!

Brokerage house Bank of America Merrill Lynch is bullish on India with an index target of 54,000 by end-2018 and believe that Investors must await dip in the market. It feels India is vulnerable to a near term global correction as too many global fund managers own shares in this market. “One of our near term concerns has been that investors are very overweight India; this makes India vulnerable to any near term global correction,” says the Merrill Lynch note, adding that a macro recovery appears to be some way off. “While we are structural bulls on India with an index target of 54,000 by end-2018, we have been highlighting that we see the market being range-bound to negative over next few months,” the note further says.

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Global Emerging Markets (GEM) funds are nearly 420 bps overweight India BoFA’s view is that this makes India vulnerable to any near term global correction. India remains the most owned market in GEM by a wide margin.

“Investors, post their company meetings, seem to agree with our view that valuations were probably pricing in too much of good news. While we think the market will remain expensive through the year, we think it will consolidate for the next 3-6 months,” the note says. Merrill Lynch is bullish on auto, banks, cement and oil. It expects pharma shares to do well near term as the market consolidates.

There always risk associated with investing directly in stock markets and there are many ways to participate in this bull run. And one such way is investing through mutual funds, whether it is lumpsum amount during heavy corrections or SIP. We have already seen in this post that the best way to invest in the markets is through Systematic Investment Plan , without worrying too much about where the markets go in short-term.

Be a wise investor!


Historical BSE Sensex returns - updated 2015

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It is that time of the year we update the historical returns of the major indices, particularly BSE Sensex and NSE Nifty.  This was a huge year for Indian Stock Markets, as they hit life-time highs due to favorable results from General Elections 2014, followed by huge FII inflows into the markets. During the year the index hit an all-time high of  28822, while the Nifty hit 8626. The following table shows S&P BSE Sensex historical data - start  & close values and the yearly returns of the sensex from 2000 to 2014.

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As far as the other major  indices are concerned, CnxIT gained about 18%, whereas the BankNifty gave huge returns gaining about 64% and the Cnx Midcap index gained about 55%. Despite the Sensex gaining 30% for the year there were many stocks which have lost 90% and some stocks gaining about 500-600%, many of them from mid-cap space.

Despite markets hitting all time highs only a few stocks made all-time highs or the highs which were made in 2008 bull run,  while most of them are still languishing well below their historical highs.
The message for retail investors is clear - index investing is better than individual stocks.  Unless the investor has an extraordinary stock picking skills, the Retail investors can achieve above-average returns by investing in index through Exchange Traded Funds (ETFs) like Nifty Bees or Top mutual funds, which have given consistent returns over longer periods of time.

Be a wise investor !