BofA Securities expects Nifty to touch 15K by CY2021-end

BofA Securities on Wednesday said it expects the Nifty to touch 15,000 at the end of the calendar year 2021, which is just 2.4% away from Wednesday’s market close of 14,644.7. The brokerage stated that it expects foreign portfolio inflows to continue in 2021 and that it could touch $10 billion for CY 2021.

Commenting on the target, Amish Shah, India equity strategist, BofA Securities, said, “In the current context, the target does not leave much upside for the markets. We are still bullish but not as bullish as we were last year because the markets have done really well.”

The foreign brokerage stated that it expects the foreign inflows into the Indian markets are going to be positive for the CY2021, but it would not be as high as that seen in 2020 at $23.3 billion.

BofA Securities expects foreign portfolio investors to pump in capital worth $10 billion in the Indian markets on the back of large and higher fiscal stimulus especially in countries like the US. While the foreign financial services firm is not pricing in a correction, it expects the returns from the markets to be lower than last year.

In its Outlook 2021 report, the brokerage stated that it was overweight on financials, industrials, materials, staples, telecom and pharmaceutical sectors whereas it was underweight on sectors such as consumer discretionary, information technology and energy.

The brokerage, in its report, said that it was overweight on industrials and materials because FIIs have been underweight on materials and marginally underweight on industrials sectors for some time and rotation in favour of these sectors is likely.

It also stated the Union Budget 2021 could be prioritising of growth over fiscal concerns in 2021 which could lead to an increase in infrastructure expenditure as one of the reasons for its stance on the industrials and materials sectors.
BofA Securities is also overweight on financials as the growth of companies belonging to this sector is set to improve and there is a limited risk of negative asset quality surprises.

BoFA Securities also expects the momentum of the ‘Make in India’ initiative to sustain in 2021 along with the reforms agenda. There could be reforms in the power sector with respect to introduction of private operations in distribution, ensure payment security, introduce direct transfer of subsidies, prevent migration of industrial consumers towards captive plants, among others.

It also said that CY 2021 could see judicial reforms. While India’s overall ease of doing business ranking improved massively over 5 years, judicial reforms could help improve overall rankings further, the brokerage said.

It also stated that India needs to shorten the time taken to enforce contracts through courts.