Since the formation of the new government, Indian stock markets have experienced a robust upsurge, culminating in record highs last week. Key rating agencies predict further gains over the next year, buoyed by declining inflation. Both the Sensex and Nifty, India's leading indices, achieved consecutive new peaks at 77,145 and 23,490 respectively.
The influx of global funds into the stock market is expected to accelerate in the near future. Additionally, the markets have become a favored choice for retail investors seeking investment opportunities.
Moody's, a global rating agency, has set a forward target of 82,000 for the BSE Sensex over the next 12 months, indicating a potential 14% increase. The agency attributes this optimism to the policy predictability under the re-elected government, foreseeing favorable conditions for economic growth and equity returns in the coming years.
"With the government's continuity assured, we anticipate further structural reforms that will bolster the earnings cycle," Moody's noted in its latest report. The emphasis remains on maintaining macroeconomic stability and enhancing GDP growth relative to real interest rates, which could prolong India's outperformance in comparison to other emerging markets.
Moody's also highlighted the ongoing debate within the market on potential catalysts that could propel it to new heights, emphasizing the government's mandate for policy changes aimed at extending the positive earnings trajectory.
Under Modi 3.0, significant developments are anticipated over the next five years, signaling positive structural shifts in the economy. India has reaffirmed its position as the fourth-largest global equity market, with its market capitalization surging by 10% to $5.2 trillion. In contrast, Hong Kong's market cap declined by 5.4% to $5.17 trillion, reinforcing India's growing stature as the second-largest emerging market after China.
Global analysts assert that the Indian stock market, thriving on retail investments, cannot be overlooked by investors prioritizing liquidity amidst the current economic landscape.
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