Nifty target at 17,500, Sensex to reach 58,300 as Indian economy picks up pace, says ICICI Direct

Over the subsequent few years, ICICI Direct believes double-digit earnings progress will probably be led by the auto sector.
(Picture: REUTERS)

Sturdy home macroeconomics might assist NSE Nifty 50 scale 17,500 and take the S&P BSE Sensex to 58,300 as India’s financial system recovers from the covid droop, mentioned home brokerage agency ICICI Direct. “With the height of the Covid resurgence behind us, rising tempo of vaccination domestically and calibrated state-specific unlocking underway, we count on financial exercise to bounce again sharply within the remaining 9 months of the monetary yr 2021-22,” the brokerage agency mentioned in a report. Benchmark indices have already surged greater helped by sturdy company earnings. The goal set for Nifty implies a ten% upside potential from present market ranges.

Financial system bouncing again

Headline indices confirmed resilience throughout the second wave of covid-19. The current rally in indices was aided by encouraging company earnings within the January-March quarter, led by the upswing in key commodities costs and robust underlying demand prospects. Additional, Good and Providers Tax (GST) collections proceed to stay above the Rs 1 lakh crore mark standing testomony to the strong home macroeconomics, in line with the report. International institutional buyers (FII) have additionally resumed investing in India, turning web patrons in June 2021 (MTD influx at US$2.1 billion) towards promoting exercise noticed in April 2021 and Might 2021.

Nifty earnings to develop 24% CAGR

Analysts at ICICI Direct mentioned their optimistic view for home markets is additional strengthened by the step-up capex by the federal government, which can create a multiplier impact on the financial system. “We count on the current broad-based up transfer in markets to proceed, with small-cap and midcaps main the good points,” they added. Stellar January-March quarter outcomes have led ICICI Direct to improve earnings estimates to the tune of ~7.5%. “Nifty EPS is now anticipated to develop at a CAGR of 24.2% between FY21- 23E. Assigning the identical PE a number of of ~22x to FY23E earnings, our resultant Nifty goal is at 17,500 with equal Sensex goal at 58,300,” the report added.

Watch these sectors

Over the subsequent few years, ICICI Direct believes double-digit earnings progress will probably be led by the auto sector (base impact), capital items house and index heavy BFSI house, which additionally contains the insurance coverage sector. In the meantime, IT and pharma house proceed to stay the favoured structural performs out there.