Indian stocks set to climb new highs: Poll

While the tit-for-tat tariff war between the United States and China has hurt emerging markets and pushed the rupee to an all-time low, the benchmark index has gained nearly 14 percent this year and hit a lifetime high of 38,989 on Aug 29, outperforming other major global indices.

That comes at a time when India’s perennial problem of higher inflation is reappearing due to rising oil prices and also as global monetary policy is shifting to a tightening bias.

Despite those concerns and increasing uncertainty ahead of national elections next year, Indian stocks have scaled several fresh highs and are forecast to continue that uptrend. The Sensex is forecast to rise another 2 percent and hit a new high of 39,500 by end-December from Wednesday’s close, according to the poll of around 50 strategists taken August 23- 30.

It is expected to gain a further 4 percent next year. The latest bullish consensus was an upgrade from predictions in a May poll as the index has already breached the end-2018 level forecast back then, largely driven by expectations for strong corporate earnings.

Indeed, all 15 strategists who answered an extra question said company earnings growth has yet to peak in India. “Strong macro-economic factors overall will push the index further up. Tax growth, good monsoon rains, rising consumption and recovering corporate earnings will support,” said SP Tulsian, an investment adviser. Asia’s third-largest economy took a hit from a ban of currency notes and a hasty implementation of goods and services tax in July last year, but recovered smartly.