The Indian stock markets have experienced a vigorous upsurge since the advent of the new administration, achieving unprecedented peaks in the past week. Esteemed rating agencies forecast further ascensions for the indices over the ensuing 12 months. This marks the second successive week where Indian benchmark indices Sensex and Nifty have reached new zeniths of 77,145 and 23,490, respectively, coinciding with a decline in inflation.
The influx of global funds into the stock market is poised to accelerate imminently. Furthermore, the markets have emerged as a preferred investment haven for retail investors. According to Moody’s, a prominent global rating agency, the “12-month forward BSE Sensex target stands at 82,000, suggesting a 14 percent upward potential.”
In its recent analysis, Moody’s highlighted that a significant advantage of the NDA’s re-election is “policy consistency, which will shape growth and equity returns over the next five years.” The report anticipates that the government will likely maintain its focus on macroeconomic stability, particularly with regard to controlling inflation.
With the continuity of the current administration, the market is expected to witness additional structural reforms, bolstering confidence in the earnings cycle. The synergy of macro stability and rising GDP growth relative to real interest rates is predicted to sustain India’s outperformance compared to other emerging market equities.
Moody’s further noted that the Indian stock market’s consistent ascension has sparked debates about potential catalysts for further significant growth. The agency asserts that the government’s mandate will likely induce policy modifications that will extend the earnings cycle, potentially surprising the market positively.
With Modi’s third term secured, further positive structural transformations are anticipated over the next five years. Additionally, India has reclaimed its position as the fourth-largest global equity market, surpassing Hong Kong. The nation’s market capitalization has surged by 10 percent, reaching $5.2 trillion.
In contrast, Hong Kong’s equity market capitalization has diminished by 5.4 percent from its peak this year, now standing at $5.17 trillion. Currently, India ranks as the second-largest emerging market after China. Global investors are now prioritizing liquidity and cannot afford to overlook the flourishing Indian stock market, which is buoyed by robust retail investments, according to international analysts.
