Mumbai: PL Capital – Prabhudas Lilladher, a leading financial advisory firm, has revised its Nifty target to 27,381 from 27,867 in its latest India Strategy Report, citing persistent macroeconomic challenges. The report notes that while rural demand is improving due to a low base and favorable monsoons, urban consumption remains subdued, impacted by rising inflation, particularly in metropolitan areas. The firm anticipates an interest rate cut by the Reserve Bank of India only after the Union Budget, as inflation remains above comfort levels. Despite these challenges, the report highlights opportunities in sectors such as Capital Goods, Infrastructure, EMS, Hospitals, Pharma, Tourism, Auto, New Energy, E-commerce, and Jewellery, recommending a stock-specific investment approach to navigate the mixed demand scenario.
Nifty50 has seen a 6% decline since October 12, attributed to Rs 72,000 crore in FII outflows, geopolitical uncertainties, a strengthening USD, and declining gold prices. The firm points to strengthened political stability following recent state elections, which could bolster reform momentum and government capital expenditure. However, corporate earnings have been under pressure, with Q2 FY24 showing a 3.2% YoY sales growth but declines in EBITDA (-2%) and PAT (-5%). Sectors such as Consumer Durables, Travel, and Capital Goods outperformed, while Auto, Metals, and Oil & Gas lagged.
PL Capital advises selective buying on dips for long-term gains and has adjusted its model portfolio, adding stocks like Polycab while increasing weights in L&T and Britannia. High-conviction picks include Lupin, Polycab India, and Triveni Turbine, as the firm navigates the evolving market landscape. Investors are urged to remain cautious and focus on long-term opportunities amidst ongoing uncertainties.
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