After delivering 26 per cent returns in 2012, the Indian stock market could have another good year. US-based brokerage Goldman Sachs has set a target of 7,000 for the Nifty for December 2013, implying about 17 per cent returns from current levels.
“The watchwords for 2013 are ‘growth recovery’. Asian regional economic growth should improve to 6.9 per cent from 6.2 per cent, and corporate earnings growth should accelerate to 13 per cent and 14 per cent in 2013-14 after two years of stagnation,” said Goldman Sachs in its 2013 Asia strategy report
“This is a favorable backdrop for equities, particularly given inexpensive valuations and conservative investor positioning. We are overweight China, India, Korea and Singapore, and tilted towards cyclicals.”
Bajaj Auto and Tata Steel are the two Indian companies in Goldman Sachs 'growth recovery' basket of 15 stocks. The brokerage believes these stocks will benefit from better economic growth and have a sharp improvement in earnings in 2013.
It has also lists 15 Asian stocks who have previously underperformed and are poised for a rebound in 2013. The lists mostly has names from materials, autos, tech and heavy industrial sectors. The only Indian company to feature in this list is Infosys.
Tata Motors, Sterlite Industries and Hindalco are some other Indian names with favorable macro exposure and attractive micro profiles relative to regional peers, according to Goldman Sachs.