What four leading brokerages are saying about 2016
The bottom 400 of the BSE 500, with very little exposure to global economy or commodity fluctuations, will drive the markets.
By ET Bureau | Updated:
India’s fragile economic recovery will strengthen in 2016-17 and corporate earnings will improve due to a lower base. The pace of global growth is a worry, but investors can bank on companies dependant on local markets and economy for returns and growth.
The bottom 400 of the BSE 500, with very little exposure to global economy or exposure to commodity fluctuations, will drive the markets and investor appetite. ET presents a gist of what four leading brokerages are saying about 2016.
Credit Suisse
Outlook: Hard indicators — oil, automobile demand —point towards an economic pick-up. The 7th Pay Commission would boost housing and transportation sector.
Strategy: Global weakness could be an overhang. Expect slower pace of EPS cuts.
Sectors: Overweight on Consumption sector. Underweight on Financials.
CLSA
Outlook: Earnings growth for FY17 should be around 15%. Some signs of economic revival already visible.
Strategy: Earnings downgrades aren’t over yet, but pace of downgrades will certainly be slow.
Sectors: Low base effect will accentuate earnings recovery in several companies from pharma, auto, cement, PSU banks and media sector.
Goldman Sachs
Outlook: GDP growth to accelerate to 7.9% in FY17. India’s cyclical upturn to continue in 2016 driven by domestic demand.
Strategy: RBI to remain on hold through 2016 on rates.
Sectors: Expect urban consumption demand and government capital spending to drive growth.
Nomura
Outlook: GDP growth to rise to 7.8% in 2016, aided by private and government consumption and some pick-up in investments. Implementation of 7th Pay Commission recommendations would mean higher infl ation and fi scal risks.
Strategy: Fiscal defi cit expected to slip to 3.6% of GDP in FY17. RBI to hold rates in 2016, as infl ation may surprise on the upside.
Sectors: Overweight on fi nancials, autos, industrials and technology. Underweight on consumer staples, pharmaceuticals, metals and telecom.
Credit Suisse on stocks: Outperform rating on Tech Mahindra, HUL, UltraTech and Tata Motors, Trim positions in SBI and Bharti.
The bottom 400 of the BSE 500, with very little exposure to global economy or exposure to commodity fluctuations, will drive the markets and investor appetite. ET presents a gist of what four leading brokerages are saying about 2016.
Credit Suisse
Outlook: Hard indicators — oil, automobile demand —point towards an economic pick-up. The 7th Pay Commission would boost housing and transportation sector.
Strategy: Global weakness could be an overhang. Expect slower pace of EPS cuts.
Sectors: Overweight on Consumption sector. Underweight on Financials.
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CLSA
Outlook: Earnings growth for FY17 should be around 15%. Some signs of economic revival already visible.
Strategy: Earnings downgrades aren’t over yet, but pace of downgrades will certainly be slow.
Sectors: Low base effect will accentuate earnings recovery in several companies from pharma, auto, cement, PSU banks and media sector.
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Goldman Sachs
Outlook: GDP growth to accelerate to 7.9% in FY17. India’s cyclical upturn to continue in 2016 driven by domestic demand.
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Strategy: RBI to remain on hold through 2016 on rates.
Sectors: Expect urban consumption demand and government capital spending to drive growth.
Nomura
Outlook: GDP growth to rise to 7.8% in 2016, aided by private and government consumption and some pick-up in investments. Implementation of 7th Pay Commission recommendations would mean higher infl ation and fi scal risks.
Strategy: Fiscal defi cit expected to slip to 3.6% of GDP in FY17. RBI to hold rates in 2016, as infl ation may surprise on the upside.
Sectors: Overweight on fi nancials, autos, industrials and technology. Underweight on consumer staples, pharmaceuticals, metals and telecom.
Credit Suisse on stocks: Outperform rating on Tech Mahindra, HUL, UltraTech and Tata Motors, Trim positions in SBI and Bharti.
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