Sensex to touch 33,200 by December 2015: BNP Paribas

BNP Paribas, a Europe based financial services company expects Sensex to touch 33,200 by December 2015. The investment house expect corporate earnings recovery in the second half of 2015 on the back of manufacturing sector improvement. The government’s steps to improve investment atmosphere should also lead recovery in industrial activity.

“The recent sharp correction in Indian equities has led to decline in valuation-related concerns which investors always had about India. Not only India’s P/E multiple has dropped in-line with the historical average, the P/BV premium is also relatively down to its long-term average,” said Manishi Raychaudhuri, MD & Asia Pacific Equity Strategist

BNP Paribas has excluded BPCL and replaced it with Reliance Industries in its portfolio. The brokerage said as oil prices are climbing back, the public sector oil refining and marketing companies look shaky.

The brokerage house also excluded Hindalco from its portfolio as recovery in price realisation seems a long way off. The brokerage expect destocking of large LME inventories, and industrial power tariff cuts in China may keep aluminium prices depressed.

BNP Paribas has added Idea Cellular after its recent underperformance. The investment firm expect strong growth in revenue, and EBITDA going forward. However, concerns remain over potential disruption by the entry of RJio– the new telecom competitor.

And, in the IT space the brokerage has replaced HCL Tech by Tech Mahindra, as the latter has more potential for an upside, while relatively it looks cheaper.