Economy solid, Sensex headed for 18k, say pundits
The Sensex has crossed 15,600 in a swift climb within three weeks of touching what was then a skeptical 15,000. Analysts peering into Mumbai’s frenetic stock bazaar are now wondering if the 30-share index can go well beyond the highs it has touched.
With the monsoon rains pouring well, global experts are now talking of an 18,000-level, dubbing India, which is eyeing 9 per cent plus growth for the third year running, a "standout" opportunity in Asia.The Sensex has gained 25 per cent from its April 2 low of 12,455, and talk of overheating is being discounted. But a lot of the analysis is based on technical indicators that track market patterns and human behaviour, rather than on an analysis of whether stocks deserve the levels based on earnings forecasts.
"Our proprietary analysis and other technical indicators do not suggest that the market is overheated,” Morgan Stanley analyst Ridham Desai said in a report last week.
Jim Walker, chief economist at CLSA, an offshoot of France’s Credit Lyonnais, said a leash on money supply and exchange rates kept inflation under check, while domestic demand boosted confidence.
"Long-term factors such as demographics and the property market, along with cyclical positives such as falling unemployment, rising wages, positive credit cycle and strong stock-market participation, all support a bullish view of the Indian market," he said. "Here there is no 'boomophobia'. India is a resurgent economy."