Brokerage firm Credit Suisse has said that policy interventions to get the GDP growth to 6.5 percent will be visible by the middle of the calendar year 2020. It has said that though the economic recovery they drive could come a few quarters later, the market should start pricing it in sooner.
The brokerage firm expects headline indices to rise as most of the market cap is linked to rising penetration of products/formalisation, market share gains, or global factors.
The brokerage expects narrow market performance to continue for now, as economic uncertainty continues to push funds into the 'safe' stocks.
With the 2020 outlook, Credit Suisse has shifted to a more concentrated model portfolio in which it has selected the 30 ideas that it believes hold the best upsides.
The brokerage stays 'overweight' on financials like SBI, ICICI Bank, ICICI Life. In telecom, it likes Bharti Airtel, in utilities PowerGrid, and Tata Steel among metal stocks. It is also minor 'overweight' on pharma (Dr. Reddy's, Lupin) and IT (Tech Mahindra), and 'underweight' on discretionary, cement, and industrials.
Flows have and should hold up the market
Flows into domestic mutual funds have slowed from the peak, but are stabilising at levels higher than seen historically, the brokerage noted.
Going ahead, as returns on fixed deposits have declined, MF distribution is expanding, and SIPs switch to large/multi-cap funds that have done better, inflows should continue. Global flows are likely to be supportive as well, even one of easing global monetary conditions and/or lower global growth risk would suffice, it further noted.
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