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Global investment advisor Goldman Sachs downgraded India to ‘marketweight’ from ‘overweight’ and gave a target of 9,600 for Nifty by June 2021.
However, UBS says, “Our end-March 2021 Nifty target is 10,000, with upside and downside scenarios of 11,500 and 6,000, respectively.”
“The wide range reflects uncertainties around Covid-driven mobility restrictions and the evolving situation. We believe risk-reward appears attractive for India in these scenarios, despite the 17 per cent rally from recent lows — but only if we presume the negative impact of Covid-19 is shortlived and not crippling,” UBS added.
Goldman Sachs said: “We lower India to ‘marketweight’ within Asia on delayed recovery and extended valuations with a Nifty target of 9,600 by June 2021. We raise infotech and defensive sectors of staples, telcos and healthcare to ‘overweight’ on higher earnings resilience, and lower select financials and domestic cyclicals to ‘underweight’.”
Jefferies
For Jefferies, another investment advisory firm, partial relaxation of lockdown from April 20 comes across as a positive, although it is limited to select manufacturing activities and e-commerce. Greater freedom has been allowed in rural areas. “Our initial checks with corporates indicate that production ramp up will be slow and constrained by demand. Another positive for rural activities is a forecast of a normal monsoon. Both these developments should be a partial relief for investor sentiments,” it added.
“Nifty has rallied sharply along with global equities. After falling 38 per cent from its mid-January high, Nifty has bounced back almost 20 per cent from its March lows, along with a rally in equity markets globally. The rally has prompted investors to ask whether we could see a sustainable recovery rally. We think not. Reduced global ‘tail’ risks are main drivers, but domestic risks remain,” Goldman Sachs said.
While markets may not retest fresh lows given reduced global risks, Goldman Sachs believes Indian equities are likely to relatively lag the region on expectations of a slower recovery. However, more forceful policy stimulus could pose a risk to that view, it further said.
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