Analysts remain upbeat, forecasting a roughly 15% gain for the NSE Nifty 50 Index.
The continued boom in global tech spending, recovering local housing demand and recovering bank earnings are expected to be among the key growth drivers of the Indian stock market. in this year.
Analysts remain upbeat, forecasting a roughly 15% gain for the NSE Nifty 50 Index over the next 12 months, according to sell-side estimates compiled by Bloomberg. That’s the top of the index’s 138% gain from its March 2020 low, the best performance of any major stock market in the world over the period.
Despite some concerns about sky-high valuations and a gradual loosening of the easy money policy, India’s benchmark is one of the top gainers in Asia so far in 2022 with gains more than 4%.
Here are the top picks for sectors and stocks, according to some of the top brokerages:
Technology
The nation’s top 10 software vendor index has more than tripled from its pandemic low, as the crisis spurs a shift in the way the world does business. While India’s top IT firms are grappling with rising wages and higher attrition amid talent demand, analysts expect strong demand for new technology to continue.
“Digitalization means that Indian IT companies are growing at the fastest pace in the last decade,” Santosh Kumar Singh, research lead at Motilal Oswal Asset Management Co., wrote in a note. “This topic is likely to remain one of the dominant ones.”
* Top picks include Tech Mahindra Ltd., Infosys Ltd., Tata Consultancy Services Ltd. and HCL Technologies Ltd.
Bank
After a years-long credit crisis exacerbated by the impact of the Covid-19 economy, analysts say the worst is over for the quality of assets and loans. lender.
“Banks have focused on strengthening their balance sheets,” steadily building up their provisions, Pankaj Pandey, head of research at ICICI Direct, wrote in a note. “The retail segment has been a key driver of credit underwriting and will continue to do so, along with agriculture and the micro, small and medium enterprise segment.”
* Top picks include State Bank of India, ICICI Bank Ltd. and Axis Bank Ltd.
Real Estate
The pandemic has caused a correction in property prices in India even as the work-from-home trend has helped boost demand for home ownership. The strict lockdown pushed out small and marginal players, while opening up the market for strong developers.
Mahesh Nandurkar, research lead at Jefferies India Pvt., says: “Housing affordability today is at its best we’ve seen in the last 20 years and broadly we are seeing creation. The job creation in the economy supports that argument wonderfully,” Mahesh Nandurkar, head of research at Jefferies India Pvt., told Bloomberg Television last week. “We’re in a housing-driven economic cycle over the next five years.”
* Top picks include Godrej Properties Ltd., Oberoi Realty Ltd., Sunteck Realty Ltd., Phoenix Mills Ltd. and Prestige Estates Projects Ltd.
Medicine
The healthcare sector is expected to remain in focus as the world continues to deal with the coronavirus.
Saion Mukherjee and Neelotpal Sahu, analysts at Nomura Financial Advisory and Securities (India), wrote in a note.
* Top picks include Ipca Laboratories Ltd., Max Healthcare Institute Ltd., Gland Pharma Ltd., Cipla Ltd., Sun Pharmaceutical Industries Ltd. and Aster DM Healthcare Ltd.
Brokers surveyed for top picks in various sectors include: Nomura, Jefferies, Yes Securities, Kotak Securities, HDFC Securities and ICICI Direct.
