BT Markets Online Survey: Where are Sensex, Nifty headed in Samvat 2080?

Diwali 2023 is just a couple of days away and Indian benchmark indices have delivered single digit returns in the Samvat 2079. BSE Sensex and Nifty50 index have gained about 8-9 per cent since the last Diwali, whereas broader markets have outperformed the headline indices as BSE midcap and smallcap indices have gained 31 per cent and 35 per cent, respectively. For the upcoming year, analysts expect Sensex and Nifty50 to deliver decent returns in the Samvat 2080. A host of brokerage firms expect Sensex to rise to 75,000 mark and Nifty50 to cross 22,000-levels, suggesting an upside of 15 per cent from current levels. However, analysts said that Indian equity markets are neither expensive, nor cheap. Market participants in the Business Today Survey believed that there are ample stock specific opportunities to invest in the midcap segment and the largecaps have limited downside from current levels. High interest rates and unfavorable economic cycles have been factors contributing to the underperformance of the markets, but large caps are better chances to deliver healthy returns. Here's what analysts say about the largecaps and headline indices:Nikhil Kapoor, Senior VP of Research at JM Financial Services We find the recent correction in markets healthy and view this as an opportunity for long-term investors. Valuations remain inexpensive, especially in the largecap segment. Nifty currently trades at 19.7 times its Forward 12 months P/E multiples as against 10-year average of 19.6times. While the Nifty midcap 100 index trades at 29.8 times 12-month forward multiples. Our internal 12-month targets on Sensex are close to 75,000 and that of Nifty is close to 22,300 on an underlying EPS growth assumption of 14 per cent. Although midcaps have always commanded premium over large cap in India, one has to be very nimble footed in stock selection within the midcap segment and give extra attention to the prevailing valuations in midcap growth companies. Investing in a sustainable growth company at a reasonable valuation is central thesis to our approach to investing.Tanvi Kanchan, Head - Corporate Strategy, Anand Rathi Shares and Stock Brokers Indian Equity markets were one of the major indices globally that withstood the volatility and maintained a positive return for the current financial year 2023. Looking at the top 20 equity markets of the world by market capitalization the performance of Indian equities between 2000 and 2023 in US dollar terms, on an average, has been second only to Brazil for the investment horizon of one year. India has made rapid transformations in terms of almost all spheres including economic progress, infrastructure development, institutional strengthening, external sector health, and progress in science and technology. With such multi-dimensional transformation, the outlook for Indian equities for the next couple of decades also looks promising. Majority of the available indicators point to a healthy growth expectation for the Indian economy.Anshul Arzare, Joint MD and CEO, YES Securities India Arzare has no specific target but said that Nifty is trading at decent valuations of 21-22 times PE while on a one-year forward basis it is trading at 18-19 times. The market has recently seen a good correction after the rally we saw in mid and large caps. The valuations do remain expensive in terms of historical average perspective, however given India's better growth prospects the current valuations do remain reasonable from a long-term perspective. India is expected to be one of the highest-growth economies and therefore there is scope for a significant wealth creation in the market. We see large caps to play the catch up on the recent rally of mid and small caps. Smallcaps have faced challenges this year, and they are not providing the superior earnings growth that would have justified owning them at other points in history. If the economic environment remains favourable for midcaps, they could continue to outperform.Shrey Jain, Founder & CEO, SAS Online Keep aside some pockets where valuations are expensive, especially in mid-small cap stocks, the valuations are moreover in line with long term averages. Next Diwali, Nifty should be around 21,500 mark.Arpit Jain, Joint Managing Director at Arihant Capital Market While acknowledging the slightly elevated valuations resulting from the recent market rally, it's crucial to recognize the significant growth across diverse sectors presently. Rather than specifying precise targets for Sensex and Nifty for the upcoming Diwali, the primary concern lies in the potential impact of next year's elections, which poses a substantial risk. As a result, refraining from providing specific Nifty targets is a prudent approach. However, the overall sentiment remains positive, especially if political unity continues. In such a scenario, substantial market gains are anticipated. We recommend that investors maintain their positions for six months, aligning with the optimistic market outlook.Santosh Pandey, President & Head, Nuvama Professional Clients Group The overall market is expensive although it’s not at exuberant valuation however there are pockets of stocks and sectors which still can be bought in the space like sugar, paper, renewables, capital goods and select mid and small caps.Satish Menon, Executive Director at Geojit Financial Services Well, the valuations are mixed. Midcaps are expensive, while small caps are comparatively moderate to midcaps and trading above the long-term average. Large caps are trading in line with the long-term average, showing a positive inclination. We have a target of 21,000 for Nifty 50 for the next year, December 2024, which translates Sensex to 70,000.