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CLSA expects Nifty to build 10% returns in one year

CLSA expects Nifty to build 10% returns in one year

CLSA expects Nifty to build 10% returns in one year
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By Mousumi Paul  Sept 19, 2019 9:35:50 AM IST (Updated)

The firm said that various data points including Nielsen data on consumption and auto dealer survey suggest that the economic slowdown has worsened during the September quarter. 

Investment group CLSA, in its latest report, has said that despite all the negatives, the Nifty will build 10 percent returns over the next 12 months.

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The firm said that various data points including Nielsen data on consumption and auto dealer survey suggested that the economic slowdown has worsened during the September quarter.
"FY20 GDP growth is likely to be around 6 percent," CLSA said. Nominal GDP growth — a measure of GDP without inflation adjustment — is likely to be in single digits, the lowest seen in the last 17 years, as per CLSA.
The brokerage believes that the government does not have the fiscal space to stimulate the economy through spending.
However, it remains hopeful of some low fiscal impact measures to augment housing demand. The research house is also optimistic on a few factors like the rate transmission, excess liquidity, equity infusion and a nudge from the government.
"Incremental interest from the foreign private equity /sovereign /pension funds, etc, in real estate sector can potentially help drive up investments," it said.
CLSA said that although the economic data is likely to remain weak over the next 2-3 quarters, positives mentioned above will play out in the medium-term.
Valuations are turning favourable as Nifty now trades at 16.8x 1Y PE or 8 percent premium to last 10 years average, the brokerage house said.
Among the large caps, the research house bets on HDFC, IndusInd Bank, LIC Housing, SBI, GAIL, NTPC, Motherson Sumi, Cadila Healthcare, Sun Pharma and L&T. Other top picks are ICICI Bank, HCL Technologies, Reliance Industries, ICICI Prudential Life Insurance, Godrej Properties and Bharti Airtel.
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