BofA remains positive on Nifty, targets 24.5K by year-end

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BofA remains positive on Nifty, targets 24.5K by year-end
Credit: © Reuters.

BofA Securities analysts said in a note Wednesday that the firm remains constructive on the Nifty and expects it to reach 24.5K by December 2024.

In their note, the analysts also highlighted the firm’s view of different sectors, even as they hold a cautious view on earnings growth, estimating 11% growth for FY25/26, which is lower than the Street view.

Supportive global factors including a soft landing in the US and a Fed pivot, as well as a strong macro in India, are expected to take the Nifty higher. Resilient demand flows and potential reform momentum acceleration after the general elections are other reasons cited by analysts.

BofA is at the same time cautious on SMID caps and PSUs, but sees “pockets of opportunities” for stocks that could benefit from upcycles (industrials and real estate) or from emerging themes including travel & tourism, energy transition, premiumization, evolving supply chains and improving productivity.

“Despite the recent correction (10%-14%) for SMID caps, we stay cautious on liquidity, valuations and concentration,” said the analysts.

With PSUs, the firm prefers stocks with relatively high visibility of earnings (defense, railways) and cheap valuations (banks, power financiers & upstream energy players).

The analysts added that they continue to prefer Investment over Consumption, and Cyclicals over Defensive. They favour Financials, Industrials, Passenger Vehicles, non-ferrous metals, and upstream energy; are neutral on Telecom; and underweight on Healthcare, Utilities and Steel.

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