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Foriegn brokerage Citi expects the Indian market to deliver mid-teen returns next calendar.
"We expect 2015 to be a good year," said Citi in its India Equity Strategy report raising the BSE Sensex target to 33,000 - an upside of 16% from current levels. The NSE Nifty target has also been revised upwards to 9,850.
The report also expects the Reserve Bank of India (RBI) to lower rates by at least 75 basis points during the course of the year.
"2015 should be front-loaded with falling rate gains, back-loaded with an actual economic / investment recovery; and accompanied by steady regulatory / execution reform. A seamless transition; falling rates to a rising economy/earnings could fire the market more," said the report authored by analysts Aditya Narain and Jitendra Tokas.
With the downside risks to inflation, the analysts believe that the rate-cut could go higher than the expected 75 basis points.
However, corporate earnings are only expected to catch up by the middle of 2015 because of low visibility on near-term loan growth, order-book and investments, the report said. However, markets have already factored this in, the report said.
The report also notes that while government would continue the policy reform and execution process, no major policy changes are expected. It would be a mix of small surprises and disappointments, the report noted.
"It should however be a constant companion in the economy/market's journey, and that itself should lend support," said the report.
The possible downside to an otherwise smooth ride could come in the form of falling commodity prices which has become too much of a good thing, the Citi report said. This could impact company earnings as about 15-20% of India Inc's net earnings depend on commodity prices.
