Nifty could touch 20,500 by December, US recession unlikely: BofA Securities
Nifty to increase further to 20,500 by December 2023 after its US economics team recently modified their perspective from one of a 'mild recession' to one of 'no recession' in the US. In its analysis, the brokerage claimed that if this outcome occurs, it will allay the market's main worry and enable sustained valuation growth.
The global brokerage believes that the Nifty would rise further to 20,500 by December 2023 because historically, the Nifty has returned primarily in the positive at least three months prior to the end of the US recession . The brokerage firm went on to say that domestic inflows could remain strong during the Federal Reserve's penultimate rate rise phase to six months following the start of rate cuts (current phase), and that a third of the Nifty market cap is still below its long-term average value.
Also Read: RBI policy meet: Why you should look beyond RBI and focus on stock market fundamentals The brokerage chooses large caps because small and mid market caps are valued highly and earnings growth estimates appear to be stretched. "Markets may drag near term given risks from recent spike in crude, inflation spike led by erratic rains & commodities rally on potential China stimulus.
However, impact of these factors maybe transient/not significant: we hence advise buying any potential dips. For instance, our analysis suggests, China stimulus does lead to FII outflows for India near term but this trend reverses on a yearly basis.
Besides, our analysis suggests contraction in Nifty's valuations could see significant active inflows for DIIs, limiting the downside," said BofA Securities in its report. Also Read: Eurozone banking stocks suffer strong losses as Italy approves 40% windfall tax Even while
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