Market Returns: Probability
Weighted BSE Sensex target for December 2016-
30200
Base Case (50%
probability) BSE Sensex: 28,000 : All outcomes are moderate. Growth will slowly
accelerate, and Morgan Stanly expect Sensex earnings growth of 9% and 21.5% in F2016 and
F2017, respectively.
Broad market earnings
growth will likely be at 9%% in F2016 and 15% in F2017.
Bull Case (40%
probability) BSE Sensex: 35,000: Better-than-expected outcomes – most notably
on policy – lead to a strong bull market, allowing for a sharp decline in short
rates, making equities inexpensive. Earnings growth accelerates to 12%
and 25% in F2016 and F2017, respectively.
Bear Case (10%
probability) BSE Sensex: 22,200: Policy response is tepid, and, more crucially,
global conditions deteriorate. Sensex earnings at 5% and 15% in F2016 and F
2017.
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