Sensex yr-end target 33K

Sensex yr-end target 33K; Fed lift off not a worry


Deutsche Equities sees the ongoing tactical correction as a healthy consolidation & investors, who had been on the sidelines may use this opportunity to realign portfolios. Deutsche maintained its year-end Sensex target of 33,000.

A positive macro-and-policy-fuelled India was the most preferred emerging market across all financial centres in Europe at the end of 2014, says Deutsche Bank in a research report. But now global as well as emerging markets investors are looking at a tactical reallocation of aggressively overweight positions towards other EM's like China, Russia and Brazil, the report says. 

Deutsche Bank met as many as 34 investors last week across key financial centers in Europe. The brokerage house further says: "Many global investors we met – who were first time investors into India, through the rally last year, are currently focused on European equity markets, following improving economic data and QE in Europe." Focusing on India, the report says, the ongoing tactical correction is a healthy consolidation and investors waiting on the sidelines should use this as an opportunity to realign their portfolios. 

Deutsche Bank maintains its year-end Sensex target of 33,000. However, on a cautious note, the report adds: "While investors remain positive over India's long term prospects and an energetic government focused on reforms, the translation of the positive macro to an on-the-ground improvement in the economy or earnings, has been far slower than anticipated." 

The brokerage house believes any tangible news flow suggesting a sustained economic/ earnings recovery will act as a significant catalyst for outperformance. MAT notice to FIIs The recent MAT notice to FIIs has created confusion among investors. Some buy side funds stated that their new investors have been enquiring about the status of this tax demand which has been raised for previous years, when they were not investors in the India investment funds, the report says. According to Deutsche Bank, a quick clarification from the government is a must as most investors are now concerned that this issue could get entangled in a protracted legal process. 

Potential Fed hike not a worry for India, but recent crude price rise maybe Foreign investors believe India is well positioned to face any Federal Reserve liftoff without materially impacting its economic equilibrium. However, few investors have now begun to worry over potential and sustained hike in global crude prices, although Deutsche Bank believes that Iran-US deal may open up Iran supplies which will yet again exert downward pressure on crude.

Happy Investing

Source : Moneycontrol.com