Goldman Sachs Upgrades India As Economic Activity Gains Pace, Raises Nifty Target
Goldman Sachs Upgrades India As Economic Activity Gains Pace, Raises Nifty Target – With hope for a rebound in corporate earnings and economic process learning Goldman Sachs turned bullish on India on hopes of enhancing pace after the lockdown curbs were eased across the country.
“Our Asia strategy team updated India to ‘overweight’ & revised its Nifty target to 14,100 by the end of 2021,” the worldwide investment bank said during a note. The revised target implies a possible upside of 13% from the present level.
Expecting a big contraction in economic activity after the coronavirus outbreak, Goldman Sachs had downgraded India to ‘market weight’ in April and delayed recovery compared to a number of its North Asian peers for Nifty’s target to 9,600 by June 2021, down from 10,800. The Nifty, tracking its global counterparts, had tumbled quite 40% from its peak in January to its March-low with a one-way rebound, wiping out all its pandemic-driven losses of the year to trade positive and scale new highs. The Nifty 50 has gained quite 7% within the last one month, quite 1,000 points within the last eight trading sessions.
Goldman Sachs is bullish on banks, energy, and therefore the technology space, which it said are going to be key contributors to the general index earnings rebound with currently underway has seen strong broad-based beats across sectors,” it said within the note. The investment bank expects corporate profits to rebound 27% in 2021 and another 21% in 2022.
Goldman Sachs also expects cyclical to perform better because the economic recovery continues to collect pace which is revised 2% higher post the sharp 30% cuts early this year,” the note said in industrial activity, high-frequency macro indicators and government CAPEX spend has prompted the financial services provider to boost its EPS estimates across sectors by 6% on a mean for FY21-23.
It even revised its volume forecasts for the auto sector and cars to grow 22% and 27% year-on-year, respectively, in FY22.
Goldman Sachs’ Top Stock Picks
The Asia strategy team has come up with an inventory of eight stocks which will outperform their sector, should the economic momentum sustain.
- Larsen & Toubro: Potential upside of 16%
- Reliance Industries: Potential upside of 12%
- HDFC Bank: Potential upside of 1% and bull case upside: 21%
- TVS Motor: Potential upside of 29%
- Avenue Supermarts: Potential upside of 15%
- Fortis Healthcare: Potential upside of 18%
- Apollo Hospitals: Potential upside of 9%
- State Bank of India: Potential upside of 30% and bull case upside of 42%
Goldman Sachs has even highlighted certain risks to the rally within the equity markets.
Macro recovery gets stalled thanks to any longer local lockdowns
Virus surges higher within the coming months as pent-up demand fizzles out
No major government stimulus
The sharp rise in non-performing loan provisions restricting banks to travel slow on credit supply
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