NSE Nifty 50 may soar from the current levels and scale 18,441 points by December, said analysts at Prabhudas Lilladher. This would take the benchmark index closer to its all-time high of 18,604. Domestic markets have been battling volatility amid geopolitical tension and with the rate hike cycle around the corner, but analysts are hopeful that the index will move higher from current levels, banking on India’s growth story. Currently, the Nifty 50 is at 16,843, down nearly 10% from its all-time high of 18,604.
India’s growth story strong, expect markets to soar
“We believe FED rate hike, crude prices and global geopolitical risks can result in near term volatility and correction,” said analysts at Prabhudas Lilladher in a note. “However we remain positive on India growth story and expect markets to de-couple over next 3-6 months and positive returns incrementally by end of 2022,” they added. Analysts added that Nifty is currently trading at 21.8x 1-year forward EPS which shows 6.3% premium to 10 year average of 20.6x. “Past 3 dips show that Nifty 50 has bottomed out around 10 year average PE except in March 20, when it bottomed out at 23% discount to the 10-year average,” they said.
18,441 is a base case scenario for Nifty 50, translating to an upside of 9.5% from current levels. In the bull case scenario, Nifty is valued at a 10% premium to 10-year average (22.6x) with a target of 20,285 — a new all-time high.
Overweight on Bank, Auto, and Capital Goods
Nifty 50 has given stellar returns in the last two years but now the tide might change. The phase of making money like in 2021 is believed to be over and volatility is expected to remain. Analysts are bullish on capital goods with strong growth potential in consumables and technology-oriented companies catering to a revival of industrial capex. The auto industry is also on the watchlist, given the hopes of resolution of the semiconductor issue and demand recovery in CV and PV segments. “Banks are biggest underperformers since first Covid wave. Healthy balance sheets and revival in credit growth augurs well for sector,” analysts noted.
Stocks picks
Largecap stocks picks:
HDFC Bank: Target – Rs 1,870
Infosys: Target – Rs 2,234
Avenue Supermarts: Target – Rs 5,345
Sun Pharmaceuticals: Target – Rs 1,050
Hindalco: Target – Rs 645
Midcap stock picks
Jindal Steel & Power: Rs 555
Ashok Leyland: 175
Crompton Greaves Consumer: Rs 533
Endurance Technologies: Rs 1,919
Sumitomo Chemical: Rs 500
Smallcap stock picks
VIP Industries: Rs 769
Westlife Development: Rs 648
Nazara Technologies: Rs 2,544
Inox Leisure: Rs 486
