Sensex may remain stagnant at 36,000 points by June 2019 if the general elections failed to produce a strong outcome- the PTI quoted Morgan Stanley report. But if the outcome was not weak then the report forecasts 44,000 points by Jun 2019. Morgan Stanley is a global investment bank.
Last week, Sensex traded at an all-time high of 36548.41 points. While Nifty crossed its Jan 31 benchmark from 11027.70 to 11078.30.
The report also suggested the probability of bull and bear market. According to the report quoted by PTI, there is a 50% chance for a bear market where Sensex will remain flat at 36,000 points. The earnings growth, in this case, would be at 5% in FY18, 23% in FY19 and 24% in FY20.
However, if there is a bull market- which is 30% likely, then Sensex would shoot up to 44,000 points. ‘The market starts believing in a strong election result as well, and the earnings growth will accelerate to 29 percent in FY19 and 26 percent in FY20’, the report was quoted.
Stock market crash in the past
Owing to China’s stalling economy that rattled equity investors around the world and the rupee that tumbled to 1.2% on the 24th August 2015, Sensex fell by 1624 points. Before that, on the 21st of Jan 2008, Sensex plunged by 1408 points when investors rushed to sell their stocks for the fear of recession in the US after the Global Financial Crisis. On 22 Jan, Sensex experienced an intraday fall of 2273 points.
Investments in the future
‘The global investment bank prefers large caps over midcaps. On the sectoral front, it votes for private sector banks, rising discretionary spends, industrials and domestic materials, and keeps out healthcare, staples, utilities, global materials, and energy’, quotes PTI.
The general elections are due in Apr-May next year.