Indian stocks set for muted gains by year-end, correction likely: Reuters poll

 

Indian stocks set for muted gains by year-end, correction likely: Reuters poll

Men watch a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, February 1, 2023. REUTERS/Niharika Kulkarni/File Photo Acquire Licensing Rights

BENGALURU, Aug 23 (Reuters) - India stocks will trade only modestly higher at year-end, according to a Reuters poll of equity analysts who said a correction was likely before then, citing tightening global financial conditions as a risk.

Driven by positive foreign and domestic investment inflows, the benchmark BSE Sensex Index (.BSESN) touched an all-time high of 67,619.2 on July 20, up around 18% from the year's low of 57,084.9 set only four months earlier.

One of the best performers among emerging market peers, Indian equities are up over 7% for the year, but concerns over U.S. interest rates remaining higher for longer along with China's slow economic recovery has halted the rally.

The median forecast in the Aug. 9-22 poll of 29 analysts showed the Sensex gaining 1.2% from Monday's close of 65,216 to 66,000 by year-end, slightly higher than predicted three months ago.

"Broad thinking is that markets need some time to digest current gains ... and the external environment is perhaps not as benign as it was maybe at the start of the year," said Rajat Agarwal, Asia equity strategist at Societe Generale.

"The dollar is starting to gain and U.S. yields are rising. U.S. financial conditions are turning out as some kind of a headwind for markets right now so we expect the market can continue to be sideways for some more time before moving higher again."