March 21 (Reuters) – India’s bluechip Nifty 50 index (.NSEI) will finish at round 18,000 factors this 12 months, about 5.5% greater than present ranges however roughly flat with end-2022, as firm earnings will probably be hit by excessive charges amongst different elements, BofA Global Research mentioned.

BofA lower its year-end goal for the Nifty by 8.3% to 18,000, implying a 0.6% drop for the 12 months after seven straight years of good points of three%-29%, and underperforming different rising markets and debt, the brokerage mentioned in a word on Monday.

The Nifty has fallen about 6% up to now this 12 months to simply under 17,100 factors and BofA Global expects the index to commerce between 16,000 to 18,000 for the remainder of the 12 months as a result of volatility unleashed by the worldwide banking disaster.

Indian corporations’ earnings progress estimates for the following two fiscal years may very well be halved attributable to tightening U.S. financial coverage, hotter climate affecting the restoration in rural demand, peaking city demand and rising deposit charges, analysts led by Amish Shah mentioned.

High-risk sectors akin to shopper, telecom and knowledge know-how might underperform the Nifty, mentioned Shah, persevering with to favour industries with a capex upcycle akin to financials, industrials, cement, metal and autos.

BofA additionally expects the speed of overseas institutional traders (FII) outflows to decelerate, saying that whereas FII’s bullish place on India is at multi-year lows, it’s unlikely to contract quickly because it expects the nation’s financial efficiency to carry up properly in a worldwide slowdown.

“We estimate $20 billion of passive domestic inflow via provident/pension/Insurance funds and SIPs – mostly invested in Nifty/Sensex ETF – could provide support to large caps,” Shah mentioned.

In case of a recession, BofA nonetheless expects the Indian financial system to fare higher and rebound quicker than the U.S. financial system.

Reporting by Aniruddha Ghosh in Bengaluru; Editing by Savio D’Souza

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