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Expecting economic recovery and strong earnings growth, brokerage Kotak Securities predicts the benchmark Nifty to touch 11,600 by the end of December 2018.
According to Kotak Securities' market outlook report for 2018, GDP growth is likely to recover as the negative effects of demonetisation and GST are expected to recede, while 23 per cent earnings growth is expected for Nifty during the next fiscal. The earnings growth is after a disappointing growth of about 4 per cent in the current fiscal, the report noted.
“We set the Nifty target of 11,600 by the end of 2018 (i.e. upside potential of about 11 per cent from current levels), ” Kotak Securities said.
As Kotak estimates FY19 GDP is expected to grow by 7.1 per cent. “GDP growth is likely to recover as the negative effects of demonetisation and GST recede,” the report added.
The report also noted that the government expenditure on rural economy and investment cycle will pick-up in the second half of 2018. Besides, government spending on affordable housing and infrastructure will have a multiplier effect. Also, markets are expected to remain robust as the share of equities in the overall financial savings is seen to be rising in the future.
“Assuming only 3-4 per cent of incremental household savings going into equities, it equals $16-18 billion per annum,” it said.
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