Indian stocks won’t return to their pre-COVID-19 levels this year despite a rally in recent months because companies face further difficulties and a market correction is likely, a Reuters poll of equity strategists found.
The benchmark BSE Sensex Index has rallied over 50% from a record low hit on March 24, a day before Prime Minister Narendra Modi imposed a strict nationwide lockdown, which ended at the start of June, to try to control the pandemic.
The index is still down around 6% so far this year and is about 8% below its life-high of 42,273.87 on Jan 20.
Nearly two-thirds, or 30 of 46 equity strategists polled, said a significant correction in Indian equities was either likely or very likely over the next three months.
The BSE Sensex was forecast to end 2020 at 39,000, near Tuesday’s close of 38,843.88, the latest Reuters poll taken Aug. 13-25 found. That would be a 5.5% loss for 2020, marking its worst calendar year performance since 2011.
It was predicted to rise to 40,500 by mid-2021, which would still be more than 4% below the pre-pandemic high of 42,273.87.
Asked what would likely drive stocks for the rest of the year, most of those questioned said economic data and corporate earnings rather than the direct impact of the spread of the novel coronavirus.