The prospect of a change of guard at the finance ministry has lifted stock market sentiment, probably the most in the last 12 months, an ET poll of top brokers and fund managers revealed. Expectations that a new finance minister, if Pranab Mukherjee moves on to become the nation’s president, would push through some economic reforms have fund managers and analysts bet that the Sensex can rise as much as 23.5 per cent by December.
Of the 20 brokerages and fund managers polled, two expect the Sensex to cross 20,000 while 11 of them see the benchmark index trade between 17,000 and 19,000 by December 31.
The poll result is a contrast to the previous three conducted by ET over the last year or so, when the bias about the market’s prospects among majority of the participants was mostly negative.
In this poll, participants have a moderate upward bias, though not much has changed for a significant upgrade as interest rates are high, inflation remains sticky and eurozone issues are far from solved.
The possibility of lower rainfall this season is a fresh concern for investors, but a silver lining has been the fall in oil prices, which weakened to their lowest since October on Thursday after the USFederal Reserve decided against any major monetary stimulus.
Asian shares fell after China’s manufacturing activity in June declined, sparking hopes of further policy steps to revive growth. The Sensex rose 136 points to 17,032.56 on Thursday, rebounding from losses, as JPMorgan upgraded its rating for India to overweight from neutral – the first large investment bank to do so – on the grounds that most of the negatives are priced into stock valuations, lower oil prices and possible rate cuts by the year-end.
“We expect the market to be stable now. The Greece elections are behind us now; on the domestic front, the confusion over the presidential elections is likely to clear out in two-three months. We may see the government taking some positive decisions post the presidential elections,” said Sunil Singhania, head of equities atReliance Mutual Fund. “Our big concern now is the monsoon; initial data has not been very encouraging till now,” he added.
Majority of the poll participants is rooting for C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, or P Chidambaram, Union home minister, as the next finance minister.
Their appointment would boost stock market sentiment, but sceptics say investors are expecting too much from them in a hostile political environment and challenging economic environment.
(curtsey: economic times)
Head Research Department