Sensex set to hit 42,000-mark, Nifty 12,500! Auto, Banking, NBFC shares to outperform other stocks

Stock Market Outlook: Sensex, Nifty and other Indian indices are going through testing times post-budget 2019 as the budget surcharge hasn't gone down well with the FIIs. However, stock market experts are of the opinion that this FII anger is not going to stay long as they are fishing out the money which was meant for short-term investment. The stock market experts are of the opinion that in FY20, the Indian markets are poised to scale new highs. They say that Sensex is heading for 42,000 levels while the Nifty 50 index is heading for 12,500. Reason for this bullish prediction is their expectation that FIIs would re-invest their money again into the Indian market with a long-term perspective. As we are heading for the Deepawali quarter that begins from August business of auto, banks and NBFCs are expected to register robust growth and hence auto, finance, banking and NBFC stocks would outperform other stocks at Dalal Street.

Giving an idea about the equity market outlook Anoop Bhaskar, Head – Equity, IDFC AMC said, "With the budget and elections behind us, the focus should now shift to earnings. Q4 Earnings season concluded on a mixed note – the BSE200 earnings reported a strong growth off a weak base (mainly aided by Corporate Banks), worries of a slowdown in consumption led by Auto dampened the market mood. In the June quarter, 11.3 per cent of the BSE200 Index saw an upgrade of more than 2 per cent in FY 20 earnings whereas 55.3 per cent of the Index saw a downgrade. Downgrades were more visible in Stable segment with 40 per cent Stables and 15.3 per cent witnessing downgrades in excess of 2 per cent. Similarly, 8.4 per cent of Cyclicals were upgraded more than 2 per cent and only 2.8 per cent of Stables were upgraded more than 2 per cent." He said that through June quarter earnings are expected to be tepid as most high-frequency indicators indicate a slowdown, management commentary with respect to growth outlook across industries will be keenly watched.

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Going with the bulls and expecting rally in the equity market, especially on the FIIs re-investing their money being fished out from the market post-budget 2019 and Deepawali season fuelling auto, banking, financial and NBFC stocks Prakash Pandey, Head of Research at Fairwealth Securities said, "Recent selloff in the Indian equity market was due to the FIIs fishing out their money from the Indian markets, which was invested with the short-term perspective. Now, that money is expected come again into the Indian equity markets for long-term. apart from that August, September and October month is considered Deepawali quarter in which auto sales generally goes up. As banks and NBFC are the major lending bodies for auto loans, stocks falling in auto, banking, financial and NBFC sector are expected to outperform other sectors." Pandey said that in a long-term perspective, exponential moving average 200 i.e. EMA 200 for Nifty is 11,300, which is very strong support for the markets. One can have a good buy option if they find an opportunity to chip into the market at around 11,500 levels for the immediate target of 11,700 to 11,780. In one year perspective, Nifty can touch 12,500 from current levels, said Pandey.