Goldman Sachs downgrades India to ‘marketweight’, lowers Nifty target to 9,600 by June 2021

The US-based investment bank has also lowered the Nifty50 target to 9600 for end-June 2021, from 10,800 levels on lower earnings expectations and a lower target multiple of 15.5X.

April 17, 2020 / 10:23 AM IST

Goldman Sachs lowered its stance on Indian markets to ‘marketweight’ from ‘overweight’ earlier on delayed economic recovery and extended valuations.

The US-based investment bank has also lowered the Nifty50 target to 9,600 for end-June 2021, from 10,800 levels earlier on lower earnings expectations and a lower target multiple of 15.5x.

The revised 12-month Nifty target suggests a potential upside of nearly 7 percent from the current levels from Thursday’s closing of 8,992.

“We lower India to marketweight within our Asian allocation on delayed recovery and extended valuations. We think the Indian economy will recover more gradually than some of its North Asian peers,” said the report.


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The report further added that while markets may not retest fresh lows given reduced global risks, Goldman believes that Indian equities could relatively underperform the region on expectations of slower recovery. However, a more forceful policy stimulus could pose a risk to that view.

Sectoral View:

Goldman Sachs

Given the current economic and market uncertainty, Goldman Sachs has lowered the overall beta and tilt defensive in its sector recommendations. Thematically, the global investment bank prefers large-caps over mid-caps and defensives over banks and domestic cyclicals.

Raise defensives to overweight:

Goldman is of the view that defensives will continue to outperform over the coming quarters as investors grapple with the extent of economic disruptions due to COVID-19 and shutdowns.

“We upgrade consumer staples and telcos to overweight. While staples still look expensive and are likely to see business disruptions (from logistical and manufacturing issues), we think earnings are likely to be relatively less impacted compared to other domestic cyclical sectors,” said the report.

Upgrade Pharma and IT:

Goldman also upgraded the export-related defensive sectors of pharma and Infotech. For Pharma, the recent outperformance is likely to continue given minimal disruptions to manufacturing owing to the essential services tag, the improving raw material situation due to the resumption of API supplies from China and low valuations.

For Infotech, while the global growth slowdown is likely to impact order books for Indian IT vendors and impact near-term USD revenue growth, the earnings impact is likely to be limited given the sharp INR depreciation, the multiple margin levers and valuations look attractive, suggesting room for further outperformance.

Downgrading financials, select domestic cyclical:

Goldman Sachs is of the view that banks are likely to remain under pressure near-term given earnings headwinds on lower credit demand, higher risk aversion and potentially increasing credit costs. It stays underweight on PSU banks /NBFCs on a lower capital buffer and liquidity challenges.

Downgrade industrials to underweight:

Outside of financials, Goldman has downgraded industrials to underweight as government spending is likely to focus away from public infrastructure CAPEX, and it expects a significant impact on profitability from lower construction activity, potential further

Stay marketweight on equities:

Goldman Sachs stays marketweight on utilities, oil and gas (on near-term earnings risk for refiners but attractive risk-reward for oil marketing companies) and cement/materials sectors.

“While we expect lower cement demand given disruptions in construction activity, cement price declines are likely to be offset by lower input costs and most companies in the sector have relatively stronger balance sheets to weather near-term uncertainties,” said the report.

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

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