Morgan Stanley maintains 61,000 year-end target for Sensex; suggests these investing strategies

Largecap index returns are anticipated to speed up within the coming months.
(Picture: REUTERS)

Getting into the second half of 2021, world analysis and brokerage agency Morgan Stanley says its main indicators recommend an upside threat in index returns going ahead. This has led analysts at Morgan Stanley to keep up their bull-case Sensex goal of 61,000. “The market’s ongoing consolidation is enhancing its return prospects going into the second half of 2021 albeit the instant triggers pertain to the tempo of the probably deceleration of the second COVID-19 wave and enchancment in vaccine provide,” a latest be aware by Morgan Stanley mentioned. The brokerage agency had revised its Sensex goal for 2021 after the Union Price range in February.

“Our set of 16 main indicators and 6 coincident or lagging indicators recommend an enhancing market outlook for the second half of 2021,” the report mentioned. The problem for inventory markets, of their view, comes from the waning liquidity and valuation assist. 

Bull, Base, and Bear case state of affairs

Largecap index returns are anticipated to speed up within the coming months for India, outperforming different rising markets. The bull-case takes Sensex greater to 61,000. For this goal to materialise, Morgan Stanley estimates that the virus ebbs fully, restoration in development is sustained, and world stimulus helps asset costs. Additional, the report added that for Sensex to succeed in 61,000 the federal government might want to ship sturdy coverage together with infrastructure creation, ease of doing enterprise and financial consolidation.

Morgan Stanley’s base case state of affairs sees the index at 55,000 by December this yr. “This assumes stability within the present virus state of affairs and a restoration within the economic system per our forecasts. We anticipate Sensex earnings to rise 32% in F2022,” the report mentioned. For Sensex to succeed in these ranges, no contemporary fiscal stimulus is predicted to be launched however continued assist from the federal government on administrative and legislative reforms is anticipated. 

The bear case goal for Sensex is at 41,000. The state of affairs appears potential if the virus lingers effectively into the second half of this yr and development falters which is additional handled no coverage response, resulting in losses within the monetary system. Nevertheless, Morgan Stanley analysts solely see a 20% risk of this state of affairs going down.

Portfolio technique

When it comes to fairness portfolio technique, Morgan Stanley home cyclicals, adopted by rate-sensitive shares, world cyclicals, defensives exporters and mid-caps, large-caps, and small-caps in the identical order. “It is a stock-picker’s market, with ample alpha alternative underscored by falling correlation of returns throughout shares,” the be aware mentioned.

(The suggestions on this story are by the respective analysis and brokerage companies. Monetary Categorical On-line doesn’t bear any duty for his or her funding recommendation. Please seek the advice of your funding advisor earlier than investing.)