Still, the bank recommends investors be ready to buy on dips at BSE levels of 19,000-19,300 points.
The bank highlights rupee stabilisation at around 60 to the dollar, a normal monsoon, and potential of rate cuts later in the year are supportive of shares.
Bank of America-Merrill Lynch's model portfolio continues to be driven by sectors that would benefit from rupee weakness such as drug makers and interest rate sensitive stocks such as autos and banks. It also remains overweight on telecom shares.
BofA-Merrill's top buys currently are: Lupin Ltd, Hero MotoCorp Ltd, ICICI Bank Ltd, HDFC Bank Ltd and Idea Cellular Ltd.
Its top sells are: Bajaj Auto Ltd, Ranbaxy Laboratories Ltd, Hindustan Unilever Ltd, NTPC Ltd and Adani Power Ltd.