Australian financial services firm Macquarie has set a Nifty target of 9,200 for this December provided the government is able to muster parliamentary support for key reforms and corporate earnings pick up during the year.
"Our December Nifty target is 9,200 based on 15x price to earnings ratio in FY18," Macquarie Capital Securities India Managing Director Rakesh Arora told reporters here.
While he noted that corporate earnings are unlikely to go up "meaningfully" this year, they are expected to pick up in the next two years.
He also noted that the passage of key policy reforms particularly the implementation of goods and services tax (GST) is crucial for the markets.
Noting that foreign investors have been pulling out funds from the domestic capital markets, Arora said still the market is viewed as safe haven for investment.
"We don't think that is changing. The flows will turn if the government is able to push through key reforms such as passage of GST," he added.
The deepening troubles in the Chinese economy, rising tension in West Asia, slowdown in the reform process and recovery of investment cycle are most probable risks to the capital market growth, he added.
The comments are interesting as the Nifty, for the second day today, plunged below the 7,600-mark, while the Sensex crashed below the 25,000-mark this week, hit by concerns over slowdown in China and geo-political tension in West Asia.
"We don't expect a hard-landing in China. We only expect the Chinese economy to slow down from 7 per cent to 6.7 per cent in 2016, and the yuan is likely to fall another 3-5 per cent," its economist Tanvee Gupta Jain said.
