Indian Stock Market Predictions for 2020

Indian stock market for the year 2020 is currently neutral and experts are not sure of the market trends and are uncertain about what might happen in the coming years. A particular trend should be observed in forecasting the stock market and a divergence is identified in the charts, which makes it difficult to determine a future direction in the stock market.

With the corporate tax cut, Sensex has gained over 13 percent during the month of September and October majorly due to the measures announced by government. However, the BSE Sensex was forecast to rise 6.7 percent o 43,645 by end of 2020. Recovery in demand and global capital inflows are the major driving factors in Indian stock market for 2020.

Also, foreign portfolio investors (FPI) turned the net buyers of the Indian equities after being net sellers in July and August. According to the data from National Securities Depository (NSDL), the capital inflows in domestic equities touched a seven-month high in November. But as per the poll conducted by Reuters, RBI would cut its key interest rate for the sixth consecutive time and plans to ease in 2020 by providing a further boost to domestic equities. In addition, the average price-to-earnings ratio is currently at a high which was not seen recently and the flow in stock prices raised questions over the evaluation.

Foreign Institutional Investors (FII) also put into Indian equities in a net over 1 lakh crore in the Indian stocks during the year gone by. Watching the Dalal Street, overseas investors believe that the trend is likely to continue in 2020 as well. The total market capitalization of the Indian equity market stood around 154 lakh crore and FPIs held almost 30 lakh crore and domestic insurers held 10 lakh crore and domestic mutual funds 12 lakh crore.

Overall, Indian market will be receiving a higher share of passive flows from both India-dedicated or EM-dedicated ETFs, and the sectors such as financials, energy, IT, and most of these ETF benchmarks are likely to receive a bulk of passive FPI flows. However, most believe that its too early to predict as the pace of FII flows in 2020 and depends on the factors too.

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