Soon after reducing Nifty's March 2020 target to 11,880 from 12,900, global brokerage Nomura upgraded India to 'overweight' after finance minister Nirmala Sitharaman announced a slew of measures to stimulate growth in a weakening economy.
The government announced the rollback of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs) and domestic investors announced in the union budget in July and a Rs 70,000 crore immediate recapitalisation to PSU Banks
Further, the government has also withdrawn angel tax provisions for startups. All pending goods and services tax (GST) refunds until now to be paid in 30 days and future GST refunds to be paid in 60 days. Corporate social responsibility (CSR) violations will be treated as a civil offence from a criminal offence, she added.
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According to Nomura, the upgrade on India is amid positive local developments amid rising global uncertainty. Indian market with less than average leverage to global growth could do relatively better, Nomura explained.
It also added that the reform measures and sectoral incentives could provide a much-needed booster shot. Nomura, now, expects a recovery in the second half of 2019 and a growth of 6.6 percent in H1, from its earlier estimate of 5.8 percent.
Recently, in its June quarter earnings review report, the brokerage cut its Nifty target for March 2020 to 11,880 from 12,900 on lower earnings estimate post disappointing results season and acceleration in earnings cut. The brokerage said that it continues to have a stock specific for the India markets.
"Our key overweight sectors remain corporate banks, insurance, infrastructure, and healthcare, while we are underweight on NBFC, auto, consumer and IT Services. We replace SBI Life with ICICI Prudential Life in the model portfolio," the brokerage said in the report.
Among stocks, top picks for Nomura are ICICI Bank, ICICI Prudential, L&T, SBI, and CONCOR.
Nomura's model India portfolio includes the following stocks:
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