Goldman Sachs has upgraded India back to ‘overweight’ from ‘marketweight’ as the Indian market has been witnessing a ‘catch-up’ rally amid expectation of a potentially stable government at the Centre.
The foreign brokerage expects Nifty to hit 12,500 level in the next 12 months, up from its previous target of 11,700. Goldman Sachs had downgraded Indian market to ‘marketweight’ in September, citing near-term risks related to macro factors and earnings, stretched valuations and election-related uncertainties. The latest target implies about 6.5 per cent upside from the index’s record high of 11,738.50 points.
“On a full calendar-year basis, we expect earnings growth in India to pick up to 16 per cent this year and 14 per cent next year, which should drive Nifty’s outperformance,” the brokerage said in a note dated Monday. India’s sharp underperformance in the first two months of this year, signs of an uptick in demand and improving asset quality trends leading to a better-than-expected Q3FY19 earnings and pick-up in foreign flows led the brokerage to upgrade their view. The risk/reward appears favourable again for India, the note added. —FE