Nifty 10,000: No Longer A Distant Dream

In last two weeks Nifty has twice bettered its own best performance - first it reached 9350 and just a week later it recorded another high of 9500. Owing to this development the investors are beaming from ear to ear, but the question that everyone wants to ask is - will Nifty hit the 10,000 mark this year? To be fair to the analysts, most of them were of the opinion that Nifty might reach the 10,000 by the end of the year, however, as the market has already breached the 9500 level, it wouldn't be unreasonable to expect it to happen a little sooner, would it?

When we talk business we can't resort to wishful thinking or hearsay, our opinions have to have a solid foundation of facts and figures. Let's take a look at all the aspects which can potentially pave the way for the market to gallop ahead.

Good Monsoon

Last month Indian Meteorological Department (IMD) announced that it expects a normal monsoon this year. For an Agri-dependent economy like ours, it is extremely vital how monsoon behaves. As the prediction is on the positive side, it gives the market a good reason to continue its glory run. A good monsoon has the potential to uplift sectors like food, chemicals, fertilisers, agrarian equipment makers, etc. If these sectors do well in the next quarter, in all likelihood the market will rally. To reach the target of that magical five-figure number, good monsoon will have to play a critical role.

Another added advantage for the agrarian sectors, especially fertilisers, is that government has taken proactive steps to empower domestic fertiliser manufacturers. The aim is to make India self-sufficient in fertilisers. From making provisions to reduce import of chemical components to providing subsidies to loss-making companies, the government looks committed to create a level-playing field for the domestic players.

Government's Focus On Development

For any economy to develop it's important that it is driven by a decisive and development-oriented leadership. The Modi-led NDA government came to power in May 2014. This May marks the completion of 3 years of the Modi regime. The market chart certainly suggests that Public Sector Units (PSU), big corporations and small and medium enterprises (SME) have grown significantly in last 3 years. The market conditions are most favourable and the same is reflecting on both the indexes. In May 2014 Nifty was trading at 7000, since then it has taken a considerable leap of around 2500 point to reach 9500. In the same line, Sensex was at 24,000 then, which has now reached its all-time high of 30,000. The numbers are overwhelming, but what has triggered such positivity that the market is scaling higher highs every now and then?

The answer to this question lies in the government's proactive measures to elevate certain sectors. At this point, infrastructure, fertilisers and banks are on the government's radar.

Currently, there are massive development projects underway which are being carried out through public-private-partnership. These projects are pumping in huge amount of money in the market which will help the infra companies to grow. Similarly, Non-performing assets (NPA) have become a big roadblock for the PSU banks. The government has stepped in to provide financial aid to the PSU banks to overcome the NPA issue. And as mentioned above the government is actively involved in empowering fertiliser companies consequently they are marching ahead on the development path.

When the relation of the government and corporations is in harmony, it only means - growth.

No Triggers In The Near Future

As all the major triggers like demonetisation, elections (domestic and international), U.S Fed meets are well behind us, it will be safe to assume that we are heading towards clear waters. The absence of trigger coupled with good earning season might take the index on a new high.

Three years down the line, the corporates are giving the Modi government thumbs up, but it still remains to be seen how long it takes for the market to reach 10,000. Also, will it be smooth as expected or the market will throw a surprise or two our way? Let's wait and watch.