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Nifty headed to 17,500; market rally to be led by small, midcaps: ICICI Direct

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Brokerage firm ICICI Direct now sees Nifty at 17,500 and Sensex at 58,300 and expects the present broad-based up move in markets to continue, with smallcap and midcaps leading the gains.

Nifty headed to 17,500; market rally to be led by small, midcaps: ICICI Direct
Brokerage firm ICICI Direct sees Nifty at 17,500 and Sensex at 58,300 and expects the present broad-based up move in markets to continue, with smallcap and midcaps leading the gains.
After Q4FY21, the brokerage upgraded earnings estimates to the tune of 7.5 percent with Nifty EPS now expected to grow at a CAGR of 24.2 percent in FY2123E to Rs 795 in FY23E.
“Assigning the same PE multiple of 22x to FY23E earnings, our resultant Nifty target is at 17,500 with equivalent Sensex target at 58,300; offering a potential upside of 10%,” ICICI Direct said in a report.
Going forward, double-digit earnings growth over FY21-23E will be led by the automobile sector (base effect), capital goods space and index heavy BFSI space, which also includes the insurance sector, it added.
ICICI Direct likes IT and pharma space as structural plays in the market.
Meanwhile, the macroeconomic condition also seems improving as the GST collection for May 2021 was at around Rs 1.02 lakh crore. This was the eighth consecutive month of more than 1 lakh crore figure.
“Going forward, with the peak of the Covid resurgence behind us, increasing pace of vaccination domestically and calibrated state-specific unlocking underway, we expect economic activity to bounce back sharply in 9MFY22E,” ICICI Direct said.
“Our view is further reinforced by the step-up capex by the government, which will create a multiplier effect on the economy,” it added.