India’s Sensex May Rise to 15,000, Macquarie Says

May 8 (Bloomberg) -- Indian stocks may extend their “impressive run,” helping the Bombay Stock Exchange Sensitive Index climb to 15,000 by June 2010, Macquarie Group Ltd. said.

The economy may “bottom out” in the second half of 2009, aided by the government’s fiscal and monetary policies, Macquarie analysts led by Seshadri Sen wrote in a report today. Bharti Airtel Ltd. and other companies that rely on domestic spending may be among the best bets, they added.

Macquarie’s forecast represents a 24 percent increase from yesterday’s closing level. The Sensex has rallied 48 percent since reaching the lowest in more than three years on March 9. Its advance is the Asia’s third largest during the period. The benchmark index plunged a record 52 percent last year.

“The market has definitely turned,” the analysts wrote. They previously estimated the Sensex would trade between 10,500 and 11,500 by the end of 2009.

The Reserve Bank of India cut interest rates on April 21 for the sixth time in as many months to a record low. The economy, Asia’s third-largest, is faring better than most in the global recession, central bank Governor Duvvuri Subbarao said.

India will grow 4.5 percent this year, compared with a 1.3 percent contraction in the world economy, the International Monetary Fund predicted this week.

Valuations of Indian stocks have increased after the recent rally. The Sensex is now valued at 13.3 times reported earnings, up from a low of 8.4 times reached in March, according to data tracked by Bloomberg.

‘Entry Opportunity’

“The speed of the recent rally raises the probability of a near-term pullback -- that would be an entry opportunity,” the analysts wrote. “Going forward, we see a greater chance of earnings upgrades than downgrades and therefore are not concerned about valuations.”

Bharti, India’s largest mobile-phone operator, has gained 9.4 percent this year. Larsen & Toubro Ltd., the nation’s biggest engineering company, and Bharat Heavy Electricals Ltd., the country’s biggest power equipment maker, are also among Macquarie’s top picks in the market, the report said.