Politics key for Indian markets, Nifty to plunge, target at alarmist 5,600: Credit Suisse

Jan 07 2013, 19:35 IST
Comments 0
Credit Suisse sees Nifty down from the current near-6000-point level. (Reuters) Credit Suisse sees Nifty down from the current near-6000-point level. (Reuters)
SummaryCredit Suisse sees Nifty down from the current near-6000-point level.

Investment banking major Credit Suisse today said political developments will be the key driver for markets in India and expects the Nifty at 5,600 by the end of this year, down from the current over-6000 points.

In a research note, Credit Suisse said that political developments, continued macro-economic stresses and sustained consumption growth will be the dominant themes of 2013. Of the three, politics is likely to attract most attention.

Survey: What do you think are India's biggest problems?

"As the 2014 March/April election date nears, political noise and uncertainties are likely to pick up," it said.

The National Stock Exchange index Nifty, which had breached the 6,000-mark, on January 2, a level last tested in January 2011. Today, the 50 share index closed 27.75 points, or 0.46 per cent down at 5,988.40.

"FY14 budget will be when the government announces its gambit for the 2014 polls, and poll planning will start in the earnest", Credit Suisse said.

There are nine state polls scheduled in 2013 (including four big ones: Delhi, Madhya Pradesh, Rajasthan and Karnataka), the results of which will "swing

political parties' assessment of their own prospects, and the moves in this giant chess game will then speed up", Credit Suisse said.

On rate cuts the report said, though many people in the market expect inflationary pressures and high interest rates to persist, market rebound has triggered hopes of a prolonged rate-easing cycle.

"While a rate cut might happen, sustained cuts are likely to be obviated by sticky inflation, as deficits stay high. Broader markets, like the broader economy, are likely to be supported by sustained consumption, especially at the low-end of the income pyramid," Credit Suisse said.

Recent reforms initiatives undertaken by the government to boost economic growth and investor sentiment have seen renewed interest by foreign investors who have made a net investment of Rs 1.23 lakh crore during 2012, the second

-highest for a year and comes after a net outflow in 2011.

Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...