While market opened at an all-time high of 39,167, Nifty crossed its previous high of 11,760.
The market started the day on a firm footing on April 3 after seeing a relentless up move in the past few days. Benchmark indices hit all-time highs in early trade. While Sensex opened at an all-time high of 39,167, Nifty crossed its previous high of 11,760. Global investment banks such as BNP Paribas as well as Goldman Sachs recently upgraded India to ‘Overweight’ citing attractive valuations, continuity of flows, recovery in earnings trajectory and hopes of formation of a stable government at the Center. BNP Paribas upgraded India to ‘overweight’ from ‘neutral’ on April 1 and also raised its December-end target for Sensex to 42,000 from 40,000 earlier. Meanwhile, Goldman Sachs sees Nifty50 hitting 12,500 in the next 12 months. On the other hand, Goldman Sachs is of the view that ‘Value’ and ‘Cyclical’ parts of the markets will perform better in coming months with investors rotating out of ‘safe haven’ or ‘quality’ stocks as political uncertainty continues to fade. In terms of sectors, Goldman Sachs upgrades PSU banks, industrials, and autos to overweight. We downgrade tech, metals, and NBFCs to underweight. Thematically, we prefer domestic over defensives and exporters. Both the global investment banks are of the view that earnings have bottomed out and India Inc. could possibly head for double-digit growth in the next 12 months or FY20.
Goldman Sachs expects earnings to grow 16 percent this year, highest in the region, and 18x target P/E with Nifty50 to reach 12,500 in the next 12 months.BNP Paribas is of the view that earnings growth estimate of 14-16% in 2019-2020E, which is slightly higher-than-expected nominal GDP growth in these years, is more credible, and growth estimates in financials, consumer discretionary and healthcare appear too high.
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