Wall Street says buy the dip on India’s Nifty 50 — and Morgan Stanley names its favorite stock
Bank of America has revealed its year-end price target for India’s Nifty index, forecasting that it will reach 20,500 points by December 2023. The Nifty 50 benchmark index is composed of the market capitalization-weighted average of 50 of the largest Indian companies. The Wall Street bank’s price target points towards a 4.5% upside from its current level of 19,625. The index has risen by 8.3% this year. Bank of America (BofA) said the change in outlook from its U.S. economics team was a key driver behind this prediction. The investment bank previously expected a mild recession in the United States and now believes such an economic downturn will not take place at all. .NSEI YTD mountain “If this scenario plays out, it takes away market’s key concern and support a continued valuation expansion,” said BofA analysts Amish Shah and Udit Dhekale in a note to clients on Aug. 8. “By Dec 2023, we expect Nifty to gain further to 20.5k,” they added. Historically, Nifty’s returns have been mostly positive during three distinct periods: at least three months before the end of a U.S. recession, during the penultimate rate hikes of the Federal Reserve, and six months after rate cuts begin, according to the analysts. Philadelphia Federal Reserve President Patrick Harker on Tuesday indicated that the U.S. central bank could be at the end of its current rate hiking cycle . Bank of America cautioned that some risks to the stock market’s growth were present, including rising crude oil prices, and the upcoming general election. “We see crude spike, vegetable inflation and China stimulus as a transitory risk and advise to buy the dip as these events drag the market near term,” they added. Morgan Stanley’s top pick Morgan Stanley named ICICI Bank as its top pick among Indian banking stocks and expects shares of the lender to rise by 40% to 1,350 Indian rupees ($16.30). ICICI Bank ‘s shares are also traded on the New York Stock Exchange. This comes after the Indian lender reported deposit growth accelerated by 18% year-on-year in its latest financial year quarter, which helped sustain strong domestic loan growth of 21% year-on-year. The Wall Street bank said the Indian lender’s asset quality remains robust and margins have experienced only minor declines despite higher funding costs. “Growth was broad-based across retail business banking and SME segments,” said Morgan Stanley analysts led by Sumeet Kariwala in a note to clients on July 23. “We expect profitability to remain strong.” ICICIBANK-IN 1Y line — CNBC’s Michael Bloom contributed to this report.
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