Tossing a bullish note on the outlook for the economy, Yes Securities, a wealth brokerage and investment advisory firm, said on Tuesday it expects benchmarks to rise at an annual growth rate. compound (CAGR) by 20% over the next four years. At this rate, Sensex will likely hit 1.25,000 and Nifty around 40,000 in four years, Yes Securities said.
Bullish on economic growth
The reason for the optimism is that India is witnessing a new confluence of forces that is set to transform the economy over the next decade, the brokerage said. This forecast from Yes Securities came on a day when India’s equity benchmarks hit a six-month high, led by gains in financials, oil & gas and IT stocks, with the Nifty50 closing above the low mark. 18,000 for the first time since April 4.
“Our internal view is that over the next four years, we could see the markets see a CAGR of 20% from now. That would roughly translate to 1.25,000 for Sensex. For Nifty, that could translate roughly to 40,000 in four years,” said Nitasha Shankar, Head – PRS Equity, Yes Securities. Activity area.
Yes Securities expects Nifty50’s average earnings growth over the next three years (23.4%) to exceed Nifty50’s average EPS growth of 6% over the past decade (FY11-20).
Premium valuation to sustain
Shankar said banks (particularly smaller financial banks), auto and automotive components, and consumer durables are expected to outperform this fiscal year.
On whether Indian equities will maintain the current premium valuation they command relative to other emerging markets, she said that would certainly be the case if “we are able to grow our GDP at a faster rate than ‘today”.
India certainly “deserves” a higher valuation because any expected GDP growth will be developed internally and India is not too dependent on another country to drive its growth, Shankar added.
Yes Securities also sees the continued underperformance of the IT and Pharmaceuticals sectors in the stock markets to continue for some time. “I don’t see the IT and pharmaceutical industry participating in the next six months,” she added.
Co’s growth objectives
Meanwhile, Anshul Arzare, Executive Director and Chief Commercial Officer of Yes Securities, said the brokerage currently has almost two lakh clients. “The target is to increase our customer base to around three lakh by March 2023 and around five lakh by March 2024,” he added.
Anshul Arzare, Executive Director and Chief Commercial Officer, Yes Securities
Although discount brokerages have taken wings in the Indian market in recent years, Yes Securities has no plans to change its existing business model and would continue to be a full-service brokerage, added Arzare.
September 13, 2022