Sensex may touch 11,000 by end-2009: HSBC

MUMBAI: HSBC Global research has set a target of 11,000 for the Sensex and 3,600 for the Nifty by the end of 2009. The investment bank expects the Indian economy to start recovering in the second half of 2009-10 (October-March), contrary to the broader consensus estimates in the market, which anticipates further weakening.

“We forecast earnings growth of 5-10% for FY10 while consensus is discounting 10% for the year from current levels,” said HSBC’s analysts in a report. “While we think earnings will remain under pressure for at least another two quarters, we expect to see signs of a recovery in 3Q FY10 (October-December),” it noted.

The investment bank said its optimistic forecast is based on the lag effect of falling interest rates, lower commodity prices, and increased oil and gas output.

HSBC notes that the key trigger for the market in the short-term would be general elections, scheduled to be held in May.

“The general election, which must be held by May, could be a major catalyst, especially if the winning coalition is business friendly and can step up economic reforms,” the investment bank added.

At 1:00 pm on Wednesday, the Sensex was at 9032.16, down 2.84 points. The Nifty was trading marginally lower at 2786.65.

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