The buoyancy in stock markets is likely to lift the broader benchmark index NSE Nifty to a record 10,000 by the end of the current fiscal, says an analyst at brokerage Edelweiss Broking. The 50-scrip ended at 9,400 on Friday (May 11).
"The next leg of uptick is expected to be driven by revival in earnings. Nifty is likely to touch 10,000 in FY18 based on EPS growth of 15-20% over the next one year," Sahil Kapoor, Chief Market Strategist, Edelweiss Broking Limited, said in a note.
It would mean a gain of 600 points, or 6 percent from the current levels.
The index has gained about 15 percent since January 1 while the 30-scrip BSE Sensex has rallied 13.6 percent, based on Thursday closing.
Kapoor said that though the markets have rallied a lot in the past few months, it need not necessarily to a correction, given the positive cues. "A stellar rally in markets has increased the clamour about Indian stocks being overheated and expensive. However, in our view, the underlying economy is growing steadily in tandem with synchronous growth uptick in DMs and EMs," he wrote.
For the next week, the biggest trigger for markets would be the external trade data for April, in addition to retail inflation and factory output statistics released on Friday.
Retail inflation came in at 2.99 percent for April while the index of industrial production (IIP) rose to 2.7 percent from March from 1.9 percent in the previous month. The figures were based on a new series with base year 2011-12. The growth rate was 5.5 percent in March 2016.
From a sectoral viewpoint, mining grew 9.7 percent while consumer non-durable goods rose 19.5 percent. The capital goods segment posted a growth of 30.5 percent.
For 2016-17, IIP grew 5 percent as against 3.4 percent in the preceding fiscal.
Some of the companies that will be declaring their quarterly and FY2017 results next week include Vedanta, Tata Steel, Quess Corporation and Tata Steel.
"Markets are currently trading at fair valuations and hence sustainability of earnings going forward is very important at current levels. Any disappointment on the earnings front and the outlook could result in profit booking," Teena Virmani, Vice President, PCG Research at Kotak Securities, said in a note.
On Friday, foreign portfolio investors (FPIs) were net buyers of Indian stocks worth Rs 841 crore, according to provisional data released by the National Stock Exchange (NSE). In sharp contrast, domestic institutional investors turned net sellers of stocks worth Rs 711 crore.