Sensex will hit 1 lakh mark soon: Jefferies' Chris Wood

Jefferies' global head of equities Christopher Wood has said that it is only a matter of time before the Sensex hits the 1 lakh mark.

In his note - Greed and Fear, Wood wrote, "This target, on a five-year view, now assumes trend of 15 percent EPS growth and that a five-year average one-year forward PE multiple of 19.8 times is maintained". This means, the target is achievable, assuming 15% growth in earnings per share and maintaining the Price to Earnings ratio for five year average projection at multiple of 19.8 times.

He also mentioned that the Indian stock markets will continue to climb the proverbial wall of worry.

However, the note also described two major risk factors that the market could face over the next few months. The first is the upcoming general election in India. The note says, "One obvious worry will be the inevitable questioning of the current consensus, namely that Prime Minister Narendra Modi will be re-elected".

Another risk is the reduction in retail investor activity following a period when the stock market has traded in a tight range. Data shows that active demat accounts have declined from 38 million in June 2022 to 31 million in April 2023.

However, the note also points out that the domestic asset management story of India continues to be attractive. Equities accounted for around 4.7% of household assets of Rs 11.1 lakh crore at the end of March. The inflows into domestic equity mutual funds continue to pour in, dominated by systematic investment plans, he added.