The Telegraph
Wednesday , March 19 , 2014
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Goldman bets on surge

Mumbai, March 18: India’s bellwether indices may have hit new lifetime highs today but they still have a lot of steam left if Goldman Sachs is to be believed.

The global investment bank today upgraded India to “overweight” even as it projected that the 50-share Nifty would touch 7600 this year.

The projection came out on a day when both the Sensex and the Nifty smashed records once again.

While the 30-share Sensex soared to a lifetime high of 22,040.72, the Nifty hit a new high of 6,574.95 in intra-day trades today. However, both these indices ended with minor gains on account of profit booking.

“We upgrade India to overweight... The cyclical macro adjustments in the country have reduced the external vulnerabilities. We now expect domestic fundamentals to improve as growth recovers in the second quarter,” Goldman Sachs said in a note dated March 14.

The brokerage said the cyclical macro adjustments in the country have resulted in a reduction in external vulnerability, eased pressure on the current account, increased forex reserves and stabilised the rupee.

It also advised its clients to focus on those stocks which gain from the elections, which it termed as an “important domestic catalyst”.

“Upcoming parliamentary elections in April could have an important impact on reform progress... Our analysis of past election moves, valuation and flows suggests the country may have more room for a pre-election rally,” Goldman Sachs added.

Expressing an optimistic outlook with regard to the performance of corporate India, it said the corporate earnings downgrade cycle has bottomed out for the country and that GDP growth will pick up from the second quarter of the next fiscal.

According to the investment bank, ONGC, Coal India, Bharat Petroleum Corporation and NTPC could be some of the public sector companies that could emerge as the key beneficiaries from the elections.

Among private players, it reckoned that ICICI Bank, Larsen & Toubro, Voltas and JSW Steel could benefit most from the elections.

However, it cautioned that a fractured verdict could puncture the stock rally as it could trigger outflows from foreign institutional investors.