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Business News/ Markets / Stock Markets/  Nifty 50 likely to hit a new all-time high of 19,500 by Dec-end
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Nifty 50 likely to hit a new all-time high of 19,500 by Dec-end

Despite the volatile market conditions, the Nifty 50 is well poised to benefit from foreign funds inflow, coupled with continuing domestic flows, strong fiscal fundamentals, and buoyant tax collections.

Wall Street brokerage Bank of America (BofA) Securities has raised its target for Nifty 50 after two consecutive downward revisions. Currently, the 50-scrip benchmark is around the 17,300 mark. (MINT_PRINT)Premium
Wall Street brokerage Bank of America (BofA) Securities has raised its target for Nifty 50 after two consecutive downward revisions. Currently, the 50-scrip benchmark is around the 17,300 mark. (MINT_PRINT)

The benchmark Nifty 50 is expected to touch a new record high of 19,500 by end of December this year. Despite the volatile market conditions, the Nifty 50 is well poised to benefit from foreign funds inflow, coupled with continuing domestic flows, strong fiscal fundamentals, and buoyant tax collections. Wall Street brokerage Bank of America (BofA) Securities has raised its target for Nifty 50 after two consecutive downward revisions. Currently, the 50-scrip benchmark is around the 17,300 mark.

In its latest report, BofA Securities analysts raised their forecast for Nifty 50 in the range of 18,500-19,500 points by December 2022.

The 50-scrip benchmark's highest level is 18,604.45 at present which was clocked in October last year.

For the upward revision, the brokerage believes the recent buying spree by foreign portfolio investors (FPIs) this month, coupled with continuing domestic flows, strong fiscal fundamentals, and buoyant tax collections as key positives for the benchmark.

However, a faster-than-expected revival in China, and a weakening in global macro and geopolitics in the remaining months of the year, can be a spoilsport for the Nifty 50 ahead. Also, among tailwinds, BofA analysts in their note pointed out a sharp correction in crude/commodity prices.

BofA analysts in their note said, "While we expect further downside risks to earnings from spillover effects of the weakening global macro and high base for Nifty profits for rest of the year, it is unlikely to be steep near-term, given sharp correction in crude/commodities. So we expect Nifty to trade within a range of 17,000-19,500, as positive/negative risks play out, with 18,500 points as our base-case target for December," as reported by PTI.

Earlier, BofA had revised its Nifty forecast downward on two occasions. Firstly, in June, followed by the latest downward revision earlier this month.

On August 11, the brokerage announced a Nifty 50 forecast of 5,600 points by December, a 10% correction from the July-end levels. In June, the brokerage had predicted Nifty to be around 14,500 points by 2022-end.

Notably, both the downward revisions were on the back of sharp foreign funds outflow.

FPIs have been net sellers in the Indian market for the first half of the year, however, the trend changed in July, and further, the buying emerged aggressive in the domestic equities in August despite rising bond yields and a strong dollar. From January to June this year, FPIs pulled out a massive 2,17,358 crore from the equities market. However, due to buying in July and August, some outflows in the equities have been recovered.

As per NSDL data, as of August 29, in the month, FPIs inflow stood at 49,140 crore in the Indian equity market.

Further, in the report, BofA highlights that its optimism is derived from the country only having two state elections namely Gujarat and Karnataka among large states until November 2023. This provides room for continued reforms. Also, the economy is relatively well-placed among emerging markets.

Also, among the positives for Nifty --- are the likely fiscal surprises on stronger-than-estimated tax collections, 5G auctions, and disinvestment revenue, along with more potential for continued reforms. The brokerage believes power sector reform may potentially be the next large reform.

If these factors played out, BofA believes Nifty has the potential to reach the higher end of their estimated target of 19,500.

BofA is not alone to have upgraded Nifty's target ahead.

ICICI Direct analysts in their latest note, also reiterated a positive stance with an upgraded target of 18600 by end of CY22, led by relative outperformance of BFSI, IT, Auto, Capital goods, and PSU. Analysts here said, "Thus, dips should be utilised as buying opportunity as strong support is placed at 16800."

On Monday, Sensex closed at 57,972.62 down by 861.25 points or 1.46%.

Nifty 50 settled at 17,312.90 below 246 points or 1.4%.

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Published: 29 Aug 2022, 08:31 PM IST
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