Bank names the best Indian stocks
A guard walks past the National Stock Exchange building in Mumbai, India, February 9, 2018.
Danish Siddiqui | Reuters
Indian markets may be in tears, but investment bank Nomura said concerns about growth, consumer confidence and rising inflation could still weigh on stocks.
“Macroeconomic uncertainty is actually a concern for the markets,” Saion Mukherjee, the bank’s head of equity research in India, said Wednesday in a virtual session at Nomura Investment Forum Asia 2021.
Indian stocks have jumped this year despite the economic impact of the coronavirus pandemic, which knocked the country off its growth path last year.
The reference owl 50 The index, which represents the weighted average of 50 of India’s largest companies on the National Stock Exchange, is up 11% since the start of the year on Wednesday. On the other hand, India’s GDP for the fiscal year ended March 31 is estimated to have contracted 7.3% against a growth of 4% over the previous 12 months.
“I think there is not a strong correlation between GDP growth and earnings growth, at least in the short term,” Mukherjee said.
Microeconomic factors such as corporate profits look “relatively better” at this point, he said. Mukherjee added that there is enough cushion for corporate profits, which have fallen slightly due to the pandemic, to come back strongly. Nomura predicted that banks and metals stocks will generate profits on the Nifty.
Mukherjee explained how the investment bank navigates in this environment. Here are Nomura’s best action choices and sector calls: