Bengaluru: The stock market rallies driven by liquidity are expected to be cold next year because global and domestic monetary policy began to tighten, according to Reuters polls who expect company revenue to increase further.
Despite the deterioration during the two waves that damaged the Covid-19 pandemic, the BSE Sensex benchmark index had surged almost 120% of the lowest record of 25,638.9 hits at the end of March last year, when the country’s first lock began.
Ultra-easily monetary policy from the Bank of India’s reserve, which has been cut down the repo level of 115 basis points to 4% since the start of the Pandemic and injecting a large amount of extra liquidity, is a primary domestic driver of the rally.
With the stimulus it is expected to remain in place at least 2021, Reuters polls August 11-24 against around 30 equity strategies expect the sensex index to rise 2.4% to 56,875 at the end of Monday 55.55.79.
Additional estimates this year more than 19% will be the highest since 2017.
But the index is predicted to increase only 4.6% next year, the weakest annual performance in six years.
“It won’t be a smooth journey for the market from here, considering that run-up has recently been strong enough,” said Ajit Mishra, vice president for research in broking religation.
“Every tightening with the RBI can be very jerking sentiment and can produce kick-jerk reactions.” “Apart from that, the new variant of Covid-19 is still on the risk of the overall economic recovery,” he added.
Inflation remains above the RBI medium-term target in the middle of 4% over the past two years, but so far the central bank has focused on growth, maintaining loose policies to support the economy.
A separate Reuters survey last month predicted the central bank will climb the main repo level of 25 basis points twice the fiscal year to 4.5%.
Meanwhile, the increasing expectation of the Federal Reserve will soon announce a taper at $ 120 billion in monthly asset purchases also holding Bulleshness on the market.
Indian companies have recently posted Stellar’s revenue growth thanks to a very low comparison base and rebounds in business activities because most of the restrictions are enforced during the second wave that destroys and turns off relaxed.
“The momentum of revenue growth is still positive, but it weakens.
The best of the revenue growth and expansion of margins ends,” said Agarwal, an Asian equity strategist at the Generale Societe.
Nearly 90%, or 25 of the 29 poll respondents, said the company’s revenue would increase further for the next 12 months.
But the increase in the increase would not be nearby, and who showed the stock immediately lost momentum.
“Our analysis of past market demonstrations shows the current rally can have a further runway.
We see the risk of cutting estimation and with the assessment of the peak, we expect the market to repair 9% near future,” said analyst at the Bank of America Securities.