Global brokerages turn bullish on Indian equities, set new targets for Nifty

Global brokerages Nomura Financial Advisory and Goldman Sachs have turned bullish on the Indian stock market and expect Nifty to touch 13,640-14,100 by December 2021, amid improvement in investment sentiment and high-frequency growth indicators as well as better-than-expected corporate earnings.

Nomura has set a target of 13,640 on Nifty50, up nearly 7 per cent from Saturday's closing value of 12,771.

Meanwhile, Goldman Sachs has pegged December 2021 Nifty50 target at 14,100. It has also upgraded India to 'overweight' from 'marketweight', citing that the country is 'most positively sensitive' market to vaccine optimism. The agency expects real GDP growth to bounce back to 10 per cent in 2021 and 7.2 per cent in 2022 as against a contraction of 9 per cent in 2020.

In Saturday's Muhurat trading session, the S&P BSE Sensex ended 195 points, or 0.45 per cent, higher at 43,638, while Nifty50 index closed at 12,771, up 51 points. During the day's trade, Sensex hit an all-time high of 43,830.93, led by gains in index heavyweights such as Bharti Airtel, Tata Steel, and Sun Pharma. Over the past week, the 30-share BSE Sensex jumped 1,744.92 points or 4.16 per cent. Domestic markets conducted a special one-hour Muhurat trading session on Diwali.

"Factoring in 4-5 percent risk to FY22/23 consensus earnings estimates and using 19 times on December-22 earnings, we arrive at December-21 Nifty target of 13,640, implying upside of 7 percent from the current levels. Upside risk to our target multiple in the near-term remains, on the back of strong capital flows," said Nomura.

Nomura said the market sentiment has improved following positive development on the coronavirus vaccine front. Analysts at Japanese advisor firm believe that surge in capital flows with the unlocking of economy will drive stocks in the near term.

"News on the vaccine front has been positive over the past few days. Pfizer and RDIF (more relevant for India) have announced that their vaccines under development have demonstrated the efficacy of over 90 percent, based on interim Phase III results. This has raised hopes of the COVID-19 pandemic being contained, if not eradicated, and normalcy gradually returning to people's lives," said Nomura. 

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