* cpurl://apps.cp./cms/?pageId=stock-index-poll poll data
* Reuters graphic on the Indian stock market outlook: https://tmsnrt.rs/2J3Iong
By Indradip Ghosh and Rahul Karunakar
BENGALURU, Nov 25 (Reuters) - India's stock market rally is set to continue and hit new record highs in 2021, according to a Reuters poll of equity strategists who overwhelmingly expected corporate earnings to return roughly to pre-pandemic levels within a year.
The Nov. 12-24 Reuters poll of over 35 equity strategists predicted the BSE Sensex index .BSESN , which is currently trading at a record high, would set new all-time peaks in the next year. It was forecast to rise about 3% from Tuesday's high to 45,750 by mid-2021.
It was then predicted to rise another 4% to 47,550 by the end of 2021, with forecasts ranging from 36,000 to 54,400.
Those forecasts were based on recent progress in developing COVID-19 vaccines even as cases rise around the world, according to over three-quarters of strategists, or 26 of 34, who answered an additional question. stock markets have rallied since a sharp sell-off in March, ignoring deep recessions in most economies and driven largely by billions of dollars of fiscal and monetary stimulus and hopes for a swift economic recovery.
Emerging market assets have also gained on the weakness in the dollar, which hit a three-month low against a basket of currencies on Monday. The Sensex has repeatedly hit record highs this month, surging more than 10% on hopes for an economic revival on coronavirus vaccine progress.
"Looking ahead, continued improvements in global risk appetite will further boost Indian equities, despite the weakness of the economy," said Shilan Shah, senior India economist at Capital Economics.
From a low of 25,638.9 on March 24 at the start of the pandemic, the Sensex has rallied over 70% to a record high of 44,601.6 on Tuesday, marking about an 8% gain for the year.
That was despite Asia's third-largest economy shrinking nearly a quarter in April-June, much worse than forecast and pointing to a longer road to recovery.
India - the world's fastest-growing major economy until a few years ago - now looks to be headed for its first full-year contraction this fiscal year since 1979, according to a separate Reuters poll which predicted gross domestic product would take over a year at least to reach pre-COVID-19 levels. ECILT/IN
But asked in the latest poll when corporate earnings would return to pre-COVID-19 levels, 28 of 32 strategists said within a year, including 10 who said within the next six months.
"We remain in a bull market that started in March, and even though one should expect corrections along the way, the equity market may have more legs before it tops out," said Ridham Desai, equity strategist at Morgan Stanley (NYSE: MS ).
"We raise EPS estimates and (the) index target. As revenues slowed during COVID-19, companies were quick to cut costs to protect margins and profits relative to expectations. We are now seeing an improvement in earnings estimate revisions breadth and earnings estimates."
(Other stories from the Reuters Q4 global stock markets poll package: Reuters Poll - Indian stock market - November 2020
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.