Sensex set for bull-run: Morgan Stanley

It further said the valuations in the current times are “attractive and almost ready for a new bull market,” but stopped short of proffering a year-end target for the benchmark Sensex.

The brokerage said the National Stock Exchange’s 50-share Nifty is currently trading in the lower half of 4,500 to 6,000,which it describes as the “big trading range”,leaving us with a “decent upside”.

The report said steepening of the yield curves (short-term rates falling faster than the long rates in the bond market),expanding profit margins and attractive valuations are among the factors which are essential for a bull market.

It can be noted the domestic markets were worst performer last year with a massive 25 per cent plunge. Since January the market has improved by almost 12 per cent.

In the domestic context,the valuations are attractive,the yield curve is laying the groundwork with the worst of liquidity crunch behind us while profit growth is entering a period of mild recovery,it said.

Sentiments have been bad in the recent times given a slew of factors like widening fiscal deficit,low growth,sharp depreciation in currency and a policy paralysis in the top echelons of the government,resulting in high volatility in the market,with a few ready to buy the India story.

The Morgan Stanley report acknowledged this,saying,”sentiment seems to be as bad as at bear market troughs.”

The last of the bull-run was witnessed in 2009,as the country made a faster recovery from the lows of the post-Lehman collapse market fall after establishing that the country,driven by domestic consumption,is resilient to global ills. This bull run saw FIIs pumping in nearly USD 30 billion into the domestic securities.

“Till we enter the phase of a sustained run of a jump in the broader market,” Morgan Stanley said,”investors can continue to make outside returns because individual stocks,both large and small,are already in a bull market.”