British brokerage Barclays on Friday maintained its December Nifty target of 10,219, saying the government is on course to deliver the required reforms which will push the markets in the medium-term.
In the note released ahead of the completion of the first year of the Narendra Modi government, it “maintains a 12-month forward Nifty target of 10,219 points, implying 21 per cent upside potential from current levels”.
Barclays’ peers like Citi, UBS and HSBC have lowered their targets for the markets recently. While UBS has cut its Nifty target to 9,200 points from 9,600 points, Citi trimmed its Sensex target from 33,000 points to 32,000 points, and HSBC has been the deepest cut with its Sensex targets being at 26,900 from 30,100 by December.
“The government is on course to deliver on substantial structural reforms, although the “on-the-ground” impact of these is likely to emerge only over the medium term,” Barclays said in the note.
The note said the exuberance with which Modi was greeted when he assumed power, now faces a “reality check” but added that the government has been successful with many initiatives such as improvement in cyclical parameters like growth and inflation, But it stressed that corporate earnings remain weak and investments are yet to pick up.
In the days ahead, consumer-related stocks like discretionary, private sector banks and building materials will exhibit growth, it said, adding it “underweight” on industrials, utilities and public sector undertakings, largely due to the lack of revival in investments.
On the macroeconomic front, it hinted at a course correction in expectations saying, “the euphoric expectations of a sharp uptick in growth a year ago are giving way to more nuanced optimism.”