Abki baar Sensex 80,000 paar? Here's what analysts said on market outlook

When will the Sensex hit 80,000? The exit poll outcome on Saturday propelled the Indian stock markets on Monday, with the Sensex zooming a huge 2,600 points to cross the 76,500 levels in opening deals – a first for the index ever. On the other hand, the Nifty50 index crossed the 23,300 levels, up over 800 points in intraday deals.

The markets, analysts said, are likely to settle as soon as they absorb the poll outcome with focus on macroeconomic fundamentals, global geopolitical developments and interest rate action of the global central banks taking centrestage.

Back home, the new government’s 100-day agenda followed by the full budget likely in July 2024 will be the key focus areas besides the progress of monsoon, inflation data and the policies of the Reserve Bank of India (RBI) as regards interest rates.

The markets, said Jyotivardhan Jaipuria, founder & managing director at Valentis Advisors, did not expect such an exit poll outcome. People, he believes, were divided ahead of the exit poll outcome on how many seats the BJP/NDA will win.

“No one expected that the NDA would be able to come this close, or even manage to cross its target of 400+ seats. While the valuations are not cheap, the markets will now focus on the new government’s 100-day agenda and then the budget. The one dampener can be a tweak in the capital gains tax structure. Otherwise, the Sensex is on course to hit the 80,000 mark over the next few months albeit amid intermittent corrections,” said Jyotivardhan Jaipuria, founder & managing director at Valentis Advisors.

On the technical front, too, analysts remain bullish on the markets and suggest the Sensex is set to reach higher levels in the months ahead.

For the Nifty, said Ajit Mishra, senior vice-president for research at Religare Broking, 23,400 levels remains a key monitorable. If the index is able to cross and decisively hold this level for some time, the markets are likely headed higher.

"Correspondingly, the Sensex can then scale up to the 80,000 mark in the next one - two weeks if the overall trend remains positive. Remain bullish on banks - State Bank of India (SBI) and Bank of Baroda (BoB) and the PSU banking space. That said, the rally in PSUs, in general, remains overdone," he said.

Word of caution

Analysts at Kotak Institutional Equities (KIE) believe that the government, going ahead, will continue its focus on key areas such as affordable healthcare and housing, energy transition, infrastructure development (defense, railways and roads) and manufacturing. The government, they said, has already executed the bulk of the required reforms for incentivising private investments.

The markets, they said in a recent note, are already factoring most of the positives and select pockets, especially the stocks of select public sector undertakings (PSUs), seeming overvalued to a certain extent. KIE finds very little value in the market and, in fact, suggests most sectors and stocks are overvalued relative to the fair value of the stocks, with the extent of overvaluation increasing in the inverse order of market capitalisation (market-cap), quality and risk.

“Many narrative and PSU stocks are trading at outlandish multiples and are factoring in optimistic volume and profitability assumptions. A large BJP victory may sustain rich-to-bubble multiples in parts of the market (automobiles, capital goods, PSUs) for longer, but we would be surprised if many of the lofty embedded expectations come to fruition," said Sanjeev Prasad, co-head at Kotak Institutional Equities (KIE), in a recent note co-authored with Anindya Bhowmik and Sunita Baldawa.