By Kailash Bathija and Rahul Karunakar
BENGALURU (Reuters) - India's stocks are expected to more than regain recent lost ground over the coming year, a Reuters poll found, but analysts trimmed their outlook for the second time in six months in a reflection of the slow pace of reforms and global headwinds.
Tracking a global selloff, Indian shares have lost about 5 percent since August and are nearly 9 percent lower so far in 2015, hurt also by the government's inability to pass key bills on tax and land acquisition reforms.
Still, Monday's poll taken over the past week showed the Sensex is likely to recover and rise to 27,500 by end-June 2016, an increase of 10 percent from Friday's close but is almost exactly where it started this year.
Similar polls in September and June had foreseen the index higher by mid-2016, compared with the latest consensus.
Also Read
The index is then forecast to rise to 29,900 by the end of 2016. That will be close to the record high of 30,024.74 hit on March 4 this year.
The BSE Sensex was among the world's best performers in 2014, rising almost 30 percent after Prime Minister Narendra Modi took office on promises of reforms to boost growth.
But the government's inability to make a lot of headway and expectations the U.S. Federal Reserve will start raising rates this week have seen investors dump emerging market assets, including Indian shares.
Foreign investors sold a net $1.7 billion in Indian shares and debt in November, pushing the currency lower. The Indian rupee hit a more than two-year low against the greenback on Friday.
Still, with expectations a goods and services tax and land acquisition bills will be passed into law, analyst see a fillip to the economy and stocks over the coming year.
A Fed rate hike would also reduce market uncertainty after investors agonized over U.S. monetary policy all year.
"Our markets (Indian shares) should start doing better from next year, with impact on the economy by the measures taken by the government and a clear trajectory from the Fed," said Neeraj Dewan, director at Quantum Securities Private Limited.
Reserve Bank of India Governor Raghuram Rajan said on Friday the central bank was ready for "any eventuality" from the Fed meeting this week.
India's stock market has generally outperformed other emerging markets over the past two years.
Economic growth in Asia's third largest economy picked up in July-September, outpacing China on improving domestic demand and manufacturing activity.
That acceleration helped persuade the RBI to keep rates unchanged last month after it had lowered the repo rate by 125 basis points this year, including a larger-than-expected 50 basis point cut in September.
(For other stories from the Reuters global stock markets poll:)
(Polling by Khushboo Mittal and Aara Ramesh; Editing by Shri Navaratnam)
