Sensex nearly doubled during Nirmala Sitharaman's first tenure as FM. Next target: 1 lakh!

The next target for Sensex is now at the much-awaited landmark of 1 lakh. According to predictions by Anand Rathi in the past, Sensex is likely to hit the 1 lakh milestone by the end of FY28 while market guru Raamdeo Agrawal had recently forecasted 1.5 lakh level in 2029 which looks doable if Sensex keeps on compounding at 15% every year and earnings growth helps it maintain current P/E levels of 25x.

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During Sitharaman’s tenure as FM, the stock market made several other records - $5 trillion market capitalisation milestone, the number of demat accounts crossed 15 crore mark and retail investors became strong enough to absorb most of FII selling.

The market heaved a sigh of relief after it was known that the ruling BJP has kept 25 out of 30 Cabinet ministries with itself. Key ministries like Defence, Home Affairs, Road Transport, Finance and External Affairs will see the same faces of BJP as in the previous term, which analysts say represents a sense of continuity.

Even when it comes to Minister of State (MoS) positions, 35 of the 41 ministers belong to the BJP.

A section of the Street was worried about the compromises the BJP would have to make after being forced to form a coalition government.

With Sitharaman’s reappointment, the focus on infra and continued fiscal consolidation should also continue, analysts at Nomura said.

"After the election outcome, the key investor concerns were about political stability and policy continuity. Any escalation of such concerns leading to a sharper fall in the markets could also adversely impact domestic flows, which have been resilient post COVID. Through the course of the past week, we think the concerns have abated. The composition of the cabinet over the weekend also indicates policy continuity at the moment," Nomura said.

The Japanese brokerage expects FII flows to improve as policy continuity is established.

Goldman Sachs analysts expect the new government to stick to the fiscal consolidation path with a continued thrust on infrastructure creation through more rail network, amidst a slight tilt towards more rural spending.

Street veteran Deven Choksey said Sitharaman’s reappointment as India’s finance minister in the new coalition government is “definitely a wise step” for keeping the focus on infrastructure development and exports.

Phillip Capital has retained a medium to long term positive stance on Indian macro and equities saying that the distribution of seats displays continuity at its best and equitable treatment of allies, which is a big plus.

The next big event for investors would be the Union Budget, which is likely to be presented in the first week of July 2024.

"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. In the third term of this coalition, with well experienced faces helming the key ministries, we see likelihood of incrementally positive/strong FII flows along with buoyant domestic flows," the brokerage said.

(Data Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)