Goldman Sachs remains overweight on India
MUMBAI: Goldman Sachs said it remains overweight on India as the medium term growth and reform story remains promising.
The global investment firm expects the benchmark Nifty to reach 9,500 in 12 months and at 10,200 by the end of 2018 as earnings growth gathers pace.
Goldman said its India equity risk barometer indicator has risen sharply in the past few months and currently stands at 1.9 standard deviation (sd) levels versus -0.5 sd at the end of last year amid demonetization.
"Lower-than-expected demonetization impact on activity and earnings, tailwinds from global reflation trade and recent favorable state election results have all helped fuel risk appetite," said Goldman Sachs.
"History suggests at a risk appetite reading of more than 1 s.d., NIFTY 1-mo and 3-mo ensuing returns are 0.1% and 0.7% respectively with a 56% chance of positive returns over the next 3-months," it added.
Goldman said while it expects broad-based market gains to be moderate in the near-term given elevated risk appetite levels, quality and stable growth stocks are likely to outperform in such an environment.
Goldman Sachs' top large cap picks include HDFC Bank, ITC, Sun Pharma, HCL Technologies and Power Grid Corporation of India.
The global investment firm expects the benchmark Nifty to reach 9,500 in 12 months and at 10,200 by the end of 2018 as earnings growth gathers pace.
Goldman said its India equity risk barometer indicator has risen sharply in the past few months and currently stands at 1.9 standard deviation (sd) levels versus -0.5 sd at the end of last year amid demonetization.
"Lower-than-expected demonetization impact on activity and earnings, tailwinds from global reflation trade and recent favorable state election results have all helped fuel risk appetite," said Goldman Sachs.
"History suggests at a risk appetite reading of more than 1 s.d., NIFTY 1-mo and 3-mo ensuing returns are 0.1% and 0.7% respectively with a 56% chance of positive returns over the next 3-months," it added.
Goldman said while it expects broad-based market gains to be moderate in the near-term given elevated risk appetite levels, quality and stable growth stocks are likely to outperform in such an environment.
Goldman Sachs' top large cap picks include HDFC Bank, ITC, Sun Pharma, HCL Technologies and Power Grid Corporation of India.
