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Last Updated : Mar 06, 2020 01:49 PM IST | Source: Moneycontrol.com

Coronavirus: Edelweiss lowers Nifty's December target to 12,000; 17 top picks

Edelweiss Securities Ltd trimmed its December 2020 target for Nifty to 12000 from 12300 earlier amid moderate earnings.

 
 
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Coronavirus hits D-Street and is accelerating in India which pushed analysts to review their estimates with regards to Nifty levels for 2020. Edelweiss Securities Ltd trimmed its December 2020 target for Nifty to 12000 from 12300 earlier amid moderate earnings.

“We are trimming December Nifty target anticipating more moderate earnings while maintaining the 17x multiple. Risks – to both earnings and multiples – lie to the downside,” said the brokerage note.

Edelweiss all feel that there are certain themes that are likely to do well such as agri and IT/pharma. “Markets are unlikely to move with the virus’s spread hereon (largely priced in); it’s going to make us want to stay safe with our portfolios, and ourselves,” said the note.

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With supply dislocations, travel restrictions and market volatility broadening out, the virus’s impact is widespread. And for now, spreading. While there are plenty of hypotheses – specialist and general — on further risks hereon from the virus, its impact is real—across geographies, businesses and markets.

“We believe its impact would be longer than just for a quarter, predominantly supply chain-linked and beyond geographies. The probability of domestic escalation is probably modest, but it has started and is something that needs to be watched,” said the note. Edelweiss further added that the risks of escalation are higher now.

The brokerage firm is of the view that in the unfolding environment – economic disruption and a reasonably aggressive policy response – would effectively result in slightly lower growth, easier interest rates, and a stable currency, and risk appetite that is pushed further ahead.

“In effect, a slower economy and weaker earnings growth, plenty of liquidity, a divergent impact on balance sheets, i.e. easier environment for the quality credits, but some risks at the lower end on account of economic sluggishness,” said the note.

With policy response and economic/business risks now more focused on the downside, consistent equity flows from domestic investors gives much-needed comfort.

“India probably does have more of a backstop in the form of domestic flows, but its swings will be globally driven. That said, with India’s relatively high nominal interest rates and falling global yields, fixed income flows could well be a sweet spot for India, adding liquidity and providing tailwinds for the currency,” said the note.

Top picks from Edelweiss in the largecap space include names like Bharti Airtel, Cipla, ICICI Lombard, IndusInd Bank, Infosys, L&T, SBI, and Tata Motors.

Edelweiss Largecap

Top picks from the Mid & Small-cap space include names like Bharat Forge, Brigade Enterprises, Dhanuka Agritech, Gujarat Gas, JustDial, JK Cement, JSPL, and SIS Ltd.

Edelweiss Midcap

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Mar 6, 2020 01:49 pm
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