Macquarie feels the valuation risk is limited to benchmark indices while midcap is still vulnerable.
Macquarie India believes cyclical recovery is clearly getting broad-based with infra having turned around and real estate is at the inflection point.
The global brokerage house said the macro risks have increased but are not alarming yet.
The Indian rupee depreciated 14 percent this year to hit record low of 72.97 a dollar and crude oil prices jumped nearly 19 percent to $79 a barrel which both hit trade deficit of the country. In addition, escalated US-China trade tensions added fuel to the fire but improving fundamentals is the only positive and enough to support market.
The Nifty50 gained more than 8 percent and the Sensex rallied nearly 11 percent year-to-date while BSE Midcap and Smallcap indices fell 10 percent and 15 percent respectively.
Macquarie feels the valuation risk is limited to benchmark indices while midcap is still vulnerable.
It holds a Neutral stance on banks & metals while it has positive view on cement, real estate, industrials, IT & autos.
The research house raised 1-year Nifty target to 12,000 based on 16.6x FY20 estimated earnings.
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