Nifty 50 likely to hit new all-time high of 19,500 by December-end

In their latest report, analysts at BofA Securities raised their forecast for nifty 50 In the range of 18,500-19,500 marks as of December 2022.

The highest level of the 50-point benchmark is currently at 18,604.45 which was seen in October last year.

For the upside correction, the brokerage believes that there is a recent buy-back by foreign portfolio investors (FPI) this month, coupled with sustained domestic inflows, strong fiscal fundamentals and tax collections as major positives for the benchmark.

However, higher-than-expected gains in China and weakness in global macro and geopolitics for the rest of the year could spell a bad game for the Nifty 50. Moreover, amidst tailwinds, BofA analysts in their note pointed to a sharp correction in crude oil/commodity prices.

“While we expect further exposure to earnings from spillover effects of weak global macros and higher base for Nifty profits for the rest of the year, a sharp correction is unlikely,” BofA analysts said in their note. Crude/Commodities. Hence we expect Nifty to trade in the range of 17,000-19,500 as positive/negative risks with 18,500 mark as our base-case target for December,” as reported by PTI Is.

Earlier, BofA revised its Nifty forecast on two occasions. First, in June, followed by the latest downward revision earlier this month.

On August 11, the brokerage announced a forecast of 5,600 points for the Nifty 50 till December, which is a 10% improvement from the end-July levels. In June, the brokerage had estimated the Nifty to be around 14,500 mark by the end of 2022.

Notably, both the downward revisions were behind sharp foreign fund outflows.

FPIs have been net sellers in the Indian market for the first half of the year, however, the trend changed in July, and furthermore, buying in domestic equities turned aggressive in August despite bond yields and a stronger dollar. From January to June this year, FPIs pulled out in a big way 2,17,358 crore from the equity market. However, some outflows in equities have recovered due to buying in July and August.

As per NSDL data, FPI inflows in the month till August 29 49,140 crore in the Indian equity market.

Furthermore, in the report, BofA highlighted that it has gained its optimism with elections being held in only two states, Gujarat and Karnataka, among the larger states by November 2023. It provides room for continuous improvements. Also, the economy ranks relatively well among emerging markets.

Also, among the positives for Nifty—there are potential financial surprises on projected tax collections, 5G auction and disinvestment revenues as well as higher chances of continued reforms. The brokerage believes that a recovery in the power sector could potentially be the next big correction.

If these factors are taken out, BofA believes that Nifty has the potential to reach the higher end of its projected target of 19,500.

BofA is not alone in pursuing the Nifty target.

Analysts at ICICI Direct, in their latest note, reiterated a positive trend with an advanced target of 18,600 by the end of CY22, led by relative outperformance in BFSI, IT, Auto, Capital Goods and PSUs. “Thus, the decline should be used as a buying opportunity as strong support is placed at 16800,” analysts said here.

On Monday, the Sensex closed down 861.25 points or 1.46% at 57,972.62.

The Nifty 50 closed down 246 points or 1.4% at 17,312.90.

first article