Goldman Sachs downgrades India to marketweight, cuts June target to 9,600

Goldman Sachs downgraded India to marketweight within Asia on delayed recovery and extended valuations.

"We lower our Nifty (end-June 2020) target to 9,600 (prior 10,800) on lower earnings expectations and a target multiple of 15.5x. This implies a 12-month potential upside of 7% from the current level," said Goldman Sachs.

According to the global brokerage firm, Indian economy will recover more gradually than some of its North Asian peers.


Indian market may not retest fresh lows as global risks have reduced but it could underperform Asian markets on expectation of a slower recovery, it added.

Indian markets have bounced back over 20% from lows after falling 38% from their mid-January high.

Goldman expects profits of Indian companies to decline by 13% year-on-year in 2020 before seeing a 23% recovery in earnings groth in 2021 as the economy recovers.

Goldman favours oversold quality growth stocks, and companies with strong balance sheet and high free cash flow yields.