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5 largecaps & midcaps global brokerages are bullish on in Indian market

Global brokerages are bullish on select blue chips and midcaps.

, ETMarkets.com|
Dec 06, 2019, 10.39 AM IST
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On a year-to-date basis, BSE Sensex has gained 12 per cent till date, while the broader Midcap and Smallcap indices are down 4 per cent and 9 per cent, respectively, for the same period.
Volatility is likely to persist in domestic equities in view of the expensive valuations of select largecap stocks amid the economic slowdown.

On a year-to-date basis, BSE Sensex has gained 12 per cent till date, while the broader Midcap and Smallcap indices are down 4 per cent and 9 per cent, respectively, for the same period.

Valuation wise, the 30-share index trades at a price-to-earnings multiple (P/E) of 28.70 times against its five-year average of 22.60 times, indicating overvaluation of stocks at the index level.

“Valuations of domestic equities are above their long-period averages. Nifty trades at 12-month forward P/E of 19 times, at 5 per cent premium to its long-period average of 18.1 times. Nifty’s P/B at 2.7 times is also above its historical average of 2.6 times,” Motilal Oswal Financial Services said in a report.

But global brokerages are bullish on select blue chips and midcaps. In separate notes to clients, JP Morgan, Nomura, HSBC have either upgraded price targets or maintained ‘buy’ ratings on the five stocks listed below.

Zee Entertainment
Foreign financial firm JPMorgan has maintained a ‘neutral’ rating on Zee Entertainment. However, it hiked the price target to Rs 320 from Rs 260 earlier. It said Zee’s domestic subscription revenue growth is looking healthy. “Improvement in balance sheet, cash flow and success of Zee5 are key for a re-rating of the stock,” JP Morgan said.

Bharti Airtel
HSBC has maintained a ‘buy’ rating on Bharti Airtel with a revised price target of Rs 540 (Rs 510 earlier). The financial services firm believes the equity raising is likely to create a near-term share sale overhang on the stock. “Fundraising bodes well for its balance sheet in the medium term. Expect regulatory clarity to emerge on multiple issues over the next few weeks,” HSBC said.

Reliance Industries
Japanese brokerage firm Nomura maintained a ‘buy’ rating on the oil-to-telecom behemoth with a price target of Rs 2,020 (Rs 1,785 earlier). It believes Jio’s sharp tariff increase further improves the outlook. “More tariff hikes look likely. Jio tariffs are still at a discount to peers and market share gain will likely sustain,” Nomura said.

Tech Mahindra
Goldman Sachs maintained a ‘buy’ rating on IT major Tech Mahindra with a price target of Rs 890. The global firm believes the telecom vertical can see sharp growth revival in FY21E/22E.

ICICI Bank
Macquarie maintained an ‘outperform’ call on the private sector lender ICICI Bank with a price target of Rs 615. It said the management is focusing on pre-provision operating profit. “Both retail and corporate asset quality looks fine,” it said, adding that ICICI Bank is its top pick from the banking sector.

(Views and recommendations given in this section are the analysts' own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)
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