Analysts have remained bullish on India supported by strong growth fundamentals under the leadership of Prime Minister Modi. Zyfin, an asset management company investing in India told CNBC in an interview, ”Demonetization and the Goods and Services act are expected to ensure greater participation in the formal economy thereby benefiting the business climate and the financial system in the long run. Domestically, 2016 was a year that saw India doing well on all grounds. With a pro-growth reform-oriented government at the center, India’s fiscal policy remained prudent as the government stuck to its budgeted numbers in 2016-17.”
Analysts believe India is currently trading at expensive valuations but they are bullish on sectors like metals, IT, PSU banks, NBFC’s, energy, and pharmaceuticals. Analysts’ estimates tend to drive short-term movements of stocks. Changes in ratings and estimates guide investors towards what markets are expecting from a particular company.
The table above lists the ratings and 12-month target prices of some large-cap stocks in India.
Analysts are most bullish on Maruti Suzuki (MARUTI), ICICI Bank (IBN), Tech Mahindra (TECHM), Infosys (INFY) and Mahindra and Mahindra (M&M) as these stocks have received more than 80% buy ratings, and few sell ratings.
Analysts are most bearish on Nestle India, Wipro (WIT) and Ambuja as these stocks have received the highest number of sell ratings. Nestle India has received just 12 buy ratings, 8 hold ratings, and 19 sell ratings while Wipro has received 10 buy ratings, 19 sell ratings, and 23 hold ratings. Ambuja Cement has received 13 buy ratings, 11 hold ratings, and 17 sell ratings. These stocks have a return potential of 2.8%,-1.1% and 1.8% respectively over the next 12 months.