Nifty likely to gain 15% in a year; tech to lead rally: Goldman
MUMBAI: The S&P CNX Nifty, punters' index of choice in derivatives trading, may gain 15% in the next one year with technology, commodities and infrastructure stocks leading the rally, Goldman Sachs has said.
But the investment bank remains underweight on Indian equities as the underlying positives seem to have been discounted. While the underlying growth seems to be intact as corporate earnings are expected to grow by 20% in 2011, high inflation, delays in key policy reforms and surge in commodity prices remain key risk areas, it said.
"India remains a good story but we currently remain underweight because of stretched valuations," said Timothy Moe, chief strategist, Goldman Sachs. The benchmark Nifty will touch 6800 in the second half of 2011, he forecast.
On Wednesday, the Nifty closed at 5903.70, down 1.22%, but is still up 12% on an annualised basis.
The brokerage said it is overweight on Taiwan, South Korea and Singapore stocks in early 2011, while Japanese equities could be amongst the early leaders
However, it expects emerging markets to underperform in the first half of next year while catching up with the developed markets in the latter half.
The brokerage continues to remain overweight on the technology sector and will be closely tracking steel and energy stocks, which could benefit from higher commodity prices.
But, with inflationary pressures continuing, it expects monetary policy to be tight and expects a rate hike of 100 bps from current levels in 2011, up from its earlier forecast of 50-75 bps till June, which can put pressure on banking stocks. Source ET
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