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Goldman bullish on Indian bourses

Publication Date : 08-01-2013


Global investment banker Goldman Sachs’ latest report commends Indian stock markets for retaining a sustained upward trend by successfully negating the impact of fall industrial output, declining exports, yawning fiscal deficit and bothersome America fiscal cliff which has been resolved recently following a political compromise.

Coming out with its fresh projections, Goldman Sachs says the benchmark 50-share Nifty of National Stock Exchange is likely to hit 7,000-mark in 2013 which is 400 points higher than its earlier forecast and 17 percent higher than the current index reading of 6,000 points. In 2012, the Nifty came on the top as Asia's best performing primary index with a gain of 27 per cent while the Bombay Stock Exchange's Sensitive Index increased 25 per cent.

In a simple explanation, Goldman Sachs says it was possible mainly on account of attractive valuation of Indian equities.

“Micro and macro-economic fundamentals combined with inexpensive valuation and conservative investor positioning should make a favourable cocktail for Asian equities market in 2013,” says Timothy Mae of Goldman Sachs in its report. Impending fiscal reforms and expected growth in corporate growth augurs well for share markets in India, he said.

The report mention of several reasons for its “overweight” outlook for Asian stocks. The Asian regional growth should improve from 6.2 per cent to 6.9 per cent, fiscal compromise in the US is good for Asian share markets in terms of fundamentals and investors under-risk factor.

Goldman Sachs expects growth in corporate earnings by 13 per cent and 14 per cent respectively in 2013 and 2014. The report says analysts have detected favourable growth factors where valuation is still attractive. It names China, India, Korea and Singapore for better returns of stock investments.

For India, the report mentions: “Cheap money flows from overseas helped blunt the impact of worsening macro-economic indicators such as current account deficit and fiscal deficit on Indian stock markets.

These are likely to continue adding to portfolio flows of the order of last year or even more in 2013.” Last year net foreign funds investment stood at $24.4 billion. The investors in 2013 can expect better returns on their investments.

The Goldman Sachs report upgrades auto and consumer goods sectors in the current calendar year but lowers telecom to underweight grade. Singling out some shares, it says Bajaj Auto and Tata Motors should yield 15 per cent return this year. Infosys Technologies which lost 16 per cent in 2012, is all set to stage a turnaround because of its attractive valuation.


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