Even as it sees the market facing downside risks in the near term, Bank of Americal Marrill Lynch maintains a Sensex target of 54,000 by end of 2018, citing itself as a structural bull on India. In a strategy note following its investor conference, the global financial services major said that it sees the market to be range-bound to negative over the next few months. Citing the consensus overweight on India as a concern, BofA ML advised investors to wait for dips to buy into the market.
“GEM funds are nearly 420 bps overweight India and our view is that this makes India vulnerable to any near term global correction,” said the note.
According to the brokerage house, a common refrain from companies was that nothing has really changed on the ground in the ten months post-election. “This highlights our near term concern that the pace of economic recovery as well as earnings recovery will disappoint investors near term,” added BofA ML. It observed that investors agreed that valuations may be pricing in a lot of positives. Although the brokerage says valuations will remain expensive through the year, it expects the market to consolidate for the next 3 to 6 months.