Nifty Dec 2022 target 19500: SBI, HDFC Bank, Dabur, Infosys, other stocks set to rally riding on economy

NSE Nifty 50 index is set to hit 19,500 levels by December 2021, on the back of ample liquidity in the system, said analysts at ICICI Securities.

Nifty, SBI, stock market
The brokerage firm noted that stocks with robust growth visibility and relatively attractive earnings yield related to economic activities may outperform. Image: Pexels

NSE Nifty 50 index is set to hit 19,500 levels by December 2022, on the back of ample liquidity in the system, said analysts at ICICI Securities. The domestic brokerage firm’s 2022 Nifty target implies an up move of 10.6 per cent from the last close and a 5% rise from the current all-time high of 18,604.45. “Our December 2022 target for the Nifty 50 is 19,500 and is based on a 5% one-year forward earnings yield or 20x PE,” the brokerage firm said. As for the stocks and sectors, the brokerage firm noted that stocks with robust growth visibility and relatively attractive earnings yield related to economic activities may outperform.

Stocks related to following economic activities likely to outperform

Rising ‘investment rate’ including digital infra: L&T (Larson & Toubro), NTPC, Power Grid Corporation of India, NHPC, UltraTech cement, Ashok Leyland, Bharti Airtel, Tata Communications

Channelising savings, insurance and credit growth: SBI (State Bank of India), HDFC Bank, Housing Development Finance Corporation, SBI Life, ICICI Lombard General Insurance Company

Pent-up demand (including real estate): Tata Motors, TVS Motor Company, The Phoenix Mills, Greenpanel Industries

Exports & staples: Alkem Laboratories, Dr. Reddy’s Laboratories, Gujarat Fluorochemicals, Infosys, Dabur India and Godrej Consumer Products

Also read: Bearish on Nifty, bullish on financials: Nifty may pause, more correction needed to ease valuations, says UBS

Moreover, it also believes that midcaps and smallcaps will play a dominant role in the ‘opening up trade’ and could eke out marginal outperformance over large caps in 2022. Also, the contact intensive sectors will pick up with a lag as retail and recreation have seen the biggest impact on mobility but have seen significant pickup, it said.

On the COVID front, it said that the severity of COVID-19 appears to be declining as rising cases diverge from moderating deaths. The daily deaths were also not spiking in sync with new cases. The domestic research and brokerage firm believes that Nifty 50 earnings per share (EPS) is expected to grow at a CAGR of 24% over FY 21-24. It also added that despite the expectations of liquidity reversal and rate hikes by the US Federal Reserve, the average yield offered by the US 10-year bond and India 10-year bond remains relatively low at around 4%. “This indicates ample liquidity in the system and expectations that the inflation spike is transitory thereby, making us constructive on Indian stocks which are offering around 5% forward earnings yield in an earnings upgrade cycle environment,” it said.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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