New Delhi: Wall Street giant Goldman Sachs recently revised its view on Indian stocks from “overweight” to “neutral,” citing concern that the growth in the economy may slow down and crimp corporate earnings. But this has also come after a rather rigorous selling spree in the stock market and most especially by overseas investors, making the significant stock indexes take a surprisingly nosedive.
Led by Sunil Koul, the analysts at Goldman Sachs maintained that India’s long-term view remains positive, though it experienced a slowdown in the short term because of various industries. According to them, its profitability has been seen under pressure with the high stock price and less consumers’ spending. Weakness in earnings reports also emerged for the quarter, which augured ill for future challenges with profit.
Market Performance
The Nifty 50 index has dropped more than 5% this month, its worst monthly performance in over four years. This is partly because of high stock valuations and selling by foreign investors who sold over $10 billion worth of Indian stocks this month alone.
Revised Market Target
Goldman Sachs downgraded the 12-month Nifty 50 index target to 27,000 from 27,500, implying a modest upside of around 9%. In the near term, the index may see further downward, possibly reaching 24,500 in the next three months before it can somewhat recover to approximately 25,500 in six months.
Sector Outlook
Improved Focus Sectors: Sectors that Goldman Sachs still likes the most include autos, telecommunication, and insurance. Moreover, they have placed real estate and Internet companies in an “overweight” position, expecting the sectors to be better.
Negative Exposure Sectors: Where they downgraded sectors include industrials, cement, chemicals, and financials, as they believe that these areas will grow less from their earnings.
