The Nifty target for calendar year 2019 has been set at 12,400, analysts at HDFC Securities shared in a note. They believe that the market could move towards a cautious return-seeking position along with higher volatility.
Among the key events the market will watch keenly next year are Brexit, European Union Parliamentary elections, and general elections in India.
Meanwhile, positive cues for the market include reasonable valuations, sentiment in favour of emerging markets (EMs) should trade risks reduce. Along with it, it is betting on recovery in corporate earnings and seven out of 12 IBC cases getting solved.
The concerns highlighted by investors include reduced spending by government, leading to lower offtake growth in auto, FMCG and media, among others. Further, continued rise in rates by US Federal Reserve along with mutual fund tapering off post general elections could weight, it says.
The research firm shared outlook on multiple sectors. Here is a gist of those themes:
- Consumer: HDFC Securities believes that the sector has lower incremental potential. Its top picks include ITC, Voltas and V-Guard.
- Financials: The brokerage believes one could look for capable managements that are positioned for growth in long term. SBI and BoB, which have better capital and better operating practices will follow secular path.
- IT Services: Recent concerns around threat from digital evolution has misplaced us, it aid, adding that it is confident of growth trajectory at Infosys, TCS and L&T Technology.
- Infrastructure: It likes KNR Constructions and PNC Infratech. Slowdown in ordering could pick up in fourth quarter,
- Oil & Gas and mining: It sees overhang of government policies on pricing and distribution. It likes GAIL, Petronet, IGL and MGL.
- Metals: It recommends avoiding the sector as Chinese slowdown could have strong repercussions.
- Auto and Cement: Near term challenges could keep stock momentum in check. It prefers Ashok Leyland.
- Pharma: It expects pharma to spring a surprise in the coming months.
