Brokerage Prabhudas Lilladher slashed the Nifty’s 12-month target to 27,381 (27,867 earlier), stating Indian equity markets are on course but headwinds are yet to peak out. It also suggested investors to do selective ‘buying on dips’ for long-term gains.
In its India Strategy report, the brokerage highlighted that demand conditions remain mixed with a steady uptick in rural demand given low base and normal monsoons. However, rising inflation is affecting demand in urban India (yet to fully play out), more so in metros and big cities, which account for around 35% of the total demand in the economy. All hopes now rest on the demand surge during festival and wedding seasons.
Prabhudas Lilladher sees interest rate cut only post budget as the spike in food inflation to 10.9% (CPI increase to 6.2%) takes it much above the comfort level of the RBI. The broking firm also suggests stock-specific approach given the tepid demand scenario.
“Capital goods, infrastructure, EMS, hospitals, pharmaceuticals, tourism, auto, new energy, E-commerce and jewellery are good themes to play at current valuations,” Prabhudas Lilladher said in a report.
Amid the ongoing volatility in domestic equity markets, the benchmark NSE Nifty50 index plunged nearly 8% so far from its all-time of 26,277, scaled on September 27, 2024. Heavy selling by foreign institutional investors amidst Donald Trump’s victory in the US presidential elections, sustained geopolitical uncertainty, strength of USD and softening of gold prices weighed market sentiment.
Meanwhile, the brokerage has raised target price for stocks such as ICICI Bank, SBI, GE Vernova T&D India, Triveni Turbine, KIMS, MAX Health, Healthcare Global, IPCA and Divi’s Laboratories.
In the bull case scenario, the brokerage sees Nifty50 at 28,750 (29,260 earlier). On the other hand, it expects Nifty may touch 24,643 (24,407 earlier) in the bear case scenario.