Nifty Could Reach 19,500 In 2023, Says Nitin Bhasin Of Ambit Capital
"We are expecting [EPS] close to 850 in FY23. In FY24, the consensus numbers are closer to about Rs 1,000 of EPS," Bhasin said.
The Nifty 50 can reach 19,500 by the end of 2023, according to market expert Nitin Bhasin. This projection is almost 7% higher than Thursday's close of Rs 18,191.
Bhasin, managing director and head-equities research at Ambit Capital, said the guidance is based on two factors—firstly G-sec yields are likely to remain around 7.4% in the next 12 months and Nifty earnings continue to be steady.
"This year we are expecting [EPS] close to 850 in FY23. In FY24, the consensus numbers are closer to about Rs 1,000 of EPS," Bhasin told BQ Prime's Sajeet Manghat.
Assuming that there could be some downgrades, the 12-month blended Nifty EPS could be around 920, he said.
Bloomberg analyst recommendations show the aggregated 12-month target price at 20,650.2, and a return potential of 13.5%. Of the 50 constituent stocks, analysts have given buy ratings for 36 and hold rating for the remaining 14.
Almost all stocks are poised to deliver positive returns over the next year.
Volatility in the coming year will be determined primarily by the balance sheets of central banks around the world, and secondly the behaviour of domestic equity investors towards rising SIP and mutual fund investments, Bhasin said.
Reduce Underweight On IT Sector
The relative underperformance of IT sector reached a trough of 38-40% on a last 12-month basis, which historically have preceded reasonably good returns over the next year, Bhasin noted.
"Given the earnings estimates revision downwards have nearly stopped in the September quarter. Number two is the massive relative underperformance. And the third factor is relative under-ownership among most of the mutual fund investors in India... reasonably large funds were underweight on IT as low as about 300-600 basis points. As you go into the next year, we are recommending that we should reduce that and become equal weight in IT sector," the expert said.
Bloomberg analysts see Nifty IT index reaching 31,626.45 in the next 12 months, with a return potential of 10.2%.
PSU Bank Rally To Last Two Quarters More
The outperformance by banking stocks also succeeded massive relative underperformance, said Bhasin. After a reasonably good performance by PSU banks, there is one to two quarters of bank outperformance left, the investment expert said.
"Should one be massively overweight? I don't think so. Hence, we are suggesting to the investors: you should be reducing your reasonably high overweights [in PSU banks] if you are carrying," he said.