Deutsche Equities, which has set a target of 24,000 points for the BSE barometer Sensex by December, expects corporate earnings to grow at 10 per cent this fiscal and a 50 per cent uptick on that figure next fiscal.
"Our expectation for earnings is 10 per cent growth for FY14 and 14-15 per cent in FY15. For FY15, we expect a more broader earnings recovery while in this year it will be far more focused on a few sectors," Deutsche Equities India Research Head Abhay Laijawala said.
The foreign broking house expects the NSE benchmark Nifty to touch 7,150 by the end of this calendar year.
Explaining the rationale for the high 24,000 Sensex target, he said, "the important point is that markets tend to re-rate when earnings inflect and I think this is going to be a factor that investors should be watching out for and this drives our expectation for our 24,000 target for this year."
The 30-share BSE benchmark index ended slightly above the 21,000-mark on Friday last.
Laijawala, who believes political scenario has positive correlation on the economy, said the upcoming general election is going to be an agent of change. "That's where the return will come from if we have a decisive political verdict."
Laijawala said investors should not only look at the election for their investments in the country.
"The election will probably decide the pace of change or the delta of change, but I think there are many other variables which are falling in place for the market which investors should not ignore."
Talking about the US Fed's tapering, Laijawal said he expects the roll-back to be done by the end of this year.
"There is a fear that the taper could be more accelerated, should the US economy move at a faster pace than anticipated," the Deutsche Equities executive said.
However, there is a bigger concern emerging among investors over earlier than anticipated move by the US Central bank on the rate cycle, he said.
Laijawala said investors should also closely look at short-term rates in the US as it could have impact on market sentiments. "When short-end rates tend to move up, that's when nervousness comes into equity markets."