"There has been some recovery in earnings in the last two quarters, and we believe it to be 21.5 per cent for next fiscal. This will drive Nifty to 11,800 levels for the year to March 2019," HDFC Securities managing director and chief executive Dhiraj Relli told news agency Press Trust of India here.
The NSE index surged 88.10 points, or 0.82 per cent, to close at a new peak of 10,788.55 on Wednesday, while the 30-share benchmark Sensex jumped 310.77 points, or 0.89 per cent, to end at a new peak of 35,081.82.
Mr Relli further said the performance would also be supported by a positive domestic economic growth with "GDP likely to grow 7.3 per cent in FY19 while GVA is likely print at 7.1 per cent" as GST regime stabilises and the rural economy recovers.
He also said recovery in private capital expenditure is on the anvil with encouraging manufacturing PMI and factory output numbers.
On the upcoming Budget, Mr Relli said he is not expecting populist spending ahead of the next general elections. On fiscal deficit, he said it will be marginal at 10-15 basis points only.
On possibility of long term capital gains tax on equities, Mr Relli said he only expects a "soft" introduction with a holding period for tax exemption rising (from 1 to possibly three years) and low tax slab (like 10 per cent) for profits on selling of stocks held for 1-3 years.