Sensex at 1 lakh: Will ‘Buy India, Sell US' trade propel index past this key milestone in 2025?

Mint

23-04-2025

Indian stock market: As the US stock markets reel from President Donald Trump's flip-flop on tariff policies, global investors are seeking safer ground — and India's stock market has emerged as a standout.
Amid the turbulence, India is increasingly being seen as a beacon of stability and opportunity in an otherwise choppy global environment. The steady buying by foreign institutional investors (FIIs) over the last five sessions to the tune of ₹ 17,930 crore further highlights the growing appeal of Indian equities.
India also became the first major market to wipe out tariff-induced declines last week. While India has risen 2% on a year-to-date (YTD) basis, the US stock market remains 10% down for the year. This divergence reflects the "sell America" trade gaining traction.
Analysts are largely concerned that the unpredictable stance of the Trump administration on tariffs and other policies undermines the outlook for the US economy.
According to a Business Standard (BS) report, Christopher Wood of Jefferies recently recommended investors 'sell' US stocks and hike exposure to India as Trump's tariff policies have put the markets on edge.
With US stocks still trading at 19.2 times forward earnings, global investors should continue trimming their exposure in favour of markets like Europe, China, and India, Wood noted in his latest GREED & Fear investor update, as per the BS report.
Prashant Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, said the Indian stock market is in a safer place when it comes to the tariff war, where the 90-day period is giving India a lot of opportunity to explore and exchange agreements with the US. Even the FIIs have felt it now, especially with the US facing its own troubles—both within the government and in terms of the financial administration, said he.
I think the US is heading into a recession, and obviously, when a country goes into recession, money tends to move out and gets invested in places with higher growth potential, Tapse added. He believes among emerging markets, India is the only place where we can see 6%+ GDP growth, along with a strong consumption story driven by its own domestic population. These are the factors he believes are behind the recovery in the Indian stock market.
But the question now remains, how much higher can the current bullish trend on Dalal Street propel the Indian benchmark index – BSE Sensex.
The index, which is currently trading at above the 80,000 level, needs to rally another 25% to achieve this milestone. While analysts believe this feat is likely, they are more hopeful about the BSE Sensex hitting a new high this year. The last all-time high on the Sensex was 85,978.25, scaled on September 27, 2024.
"I may not say that Sensex may cross 1 lakh, but there are high possibilities we will be at a new high. Sensex can likely cross the 90,000 level this year," Tapse said.
Tapse explained that this positive trajectory will be seen mainly because money always chases safer zones. "Right now, India and China are the best-case scenarios. Though China may not fully benefit since the US has ongoing tensions with it. So, if you look closely, India stands out as the most attractive destination for US or global investment flows. In addition to that, supportive microeconomic factors—like food prices, inflation, and interest rates—are also contributing to this growth," he said.
Meanwhile, Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital, sounds even more bullish and believes Sensex hitting 1,00,000 is well within the "realms of possibility".
"This would require two things, or various other similar combinations of PE and EPS. Assuming that sentiment is positive for stock markets in general and Indian stock markets in particular, this requires a Sensex EPS of around 4000, which it is quite close to achieving within 2025. The PE needs to be around 25, which is also likely to have been 25 for the last 5 and 10 years. Also, keep in mind that the RBI has started cutting rates and is likely to continue. This supports multiples close to 25. The Fed cutting rates aggressively is not so clear given the uncertain impact of tariffs on US inflation; if it happens, it also supports higher PE multiples for all markets, including Sensex," Gupta said.
Factors driving the Sensex journey to 100000, primarily, are earnings growth of 10%-12%, interest rate cuts, and positive investor sentiment, according to him.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
First Published: 23 Apr 2025, 01:02 PM IST