BSE index Sensex, which started the New Year on a strong note, is likely to extend the bull-run and touch an all-time high of 21,700 by this year-end, says a research report by HSBC. Notwithstanding that the premium of Indian markets vis-a -vis other Asian markets have come down lately, HSBC is “overweight” on emerging markets within a global context.
“We are neutral on India in the regional context,” HSBC Securities & Capital Markets India Head of Research Jitendra Sriram said in the research note, and has set a Sensex target of 21,700 for 2013 — 11 per cent above the current level. The Sensex had scaled its all-time high of 21,206.77 on January 10, 2008.
According to HSBC, India's equity market is “dancing to the tune of capital flows", thanks to high current account deficit, which has made markets sensitive to foreign direct investment and inflows from foreign investors. Positive flows not only help in improving the twin deficits, but also the sentiment towards Indian rupee, which in turn, leads to a rise in 'hot money' flows into equities, and enhances equity market liquidity, HSBC said.
