Overweight on India, earnings recovery may lift Nifty to 10,200: Goldman
While China may be more resilient, earnings in India may recover, says Goldman Sachs
April 03, 2017 / 03:01 PM IST
Timothy Moe of Goldman Sachs says the brokerage house stayed overweight on India as the medium-term reform story remains promising.
The research firm expects the Nifty to reach 9,500 in 12 months and 10,200 by 2018-end as earnings recovery gathers pace driven by 12 percent and 15 percent profit growth this year and next, he says.
He says recent earnings upgrades are the strongest since 2011, and have supported a 13 percent rally in the MSCI Asia-Pac Ex-Japan index in Q1.
"Our models project more positive revisions in the region, but their momentum may have peaked. This is driven by a similar path in the nominal GDP growth, the dominant macro driver for aggregate earnings revisions," he says.
While China may be more resilient, earnings in India may recover, according to him.
By sectors, he expects earnings revisions in consumer discretionary and industrials to turn positive, upgrades in materials to moderate but remain strong, and the downgrade cycle of banks to be close to an end.