Painting a gloomy picture of the Indian equity market, foreign brokerage houses have cut year-end target for Bombay Stock Exchange benchmark Sensex by as much as 15%, amid a weak global economic scenario.
Global brokerages such as CLSA and Morgan Stanley have cut their year-end target for Sensex, while investment banking major Credit Suisse has expressed concern that India's global linkages are now higher than what it was in 2008.
CLSA has cut its year-end Sensex target to 18,200 from the earlier 19,500. Morgan Stanley, on other hand, has reduced it target for 2011 by as much as 15% to 18,850 from 22,750.
So far this year, Sensex has lost massive 23%. It is down 25% from November high of 21,108.64. The Indian equity market is also one of the worst performing among its global peers this year.
Going by the their research reports, tough days are ahead for the Indian equity market as they believe that at a time when developed economies are barely growing despite stimulus, India cannot remain insulated from the whole picture.
"India's global linkages are now higher than in 2008. We believe slowing global growth will expand the trade deficit and hurt GDP growth," Credit Suisse said.
It further added that import volumes for India would stay resilient, export volumes will not -- which in turn will expand the trade deficit and hurt GDP growth of the country.
