Japanese brokerage firm Nomura sees a 16 per cent upside in the Nifty 50 from the current levels and has fixed its December 2018 target at 11,880, valuing the benchmark at 17 times one-year forward earnings.

The constructive view on India is due to expectations of a strong revival in corporate earnings, going ahead, backed by a stable macro-economic environment and government’s policy initiatives of the last two years.

“We believe India is at the cusp of a business cycle and set for a multi-year recovery, going ahead. Earnings growth can be over 20 per cent in FY19 and sustain,” it said in its strategy note.

There are two risk factors currently to India: spike in crude oil prices due to supply cut by OPEC till 2018-end, and interest rate hikes in India following most global central banks, especially the US Fed, and consequent rise in inflation.

Expects nil change in rates While crude oil prices are expected to remain high but stable at current levels (around $65), Nomura expects the Reserve Bank of India to keep interest rates unchanged in 2018.

Nomura is overweight on financials, oil and gas, infrastructure, healthcare (as a value buy post price correction) and automobiles, while it is underweight on information technology and cement.

HDFC Bank, State Bank of India, Shriram Transport Finance, Maruti Suzuki, Ashok Leyland, M&M, L&T, Reliance Industries, GAIL (India) and PNC Infratech are the stocks to look at in 2018.

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