Macquarie said Indian 'elephant' will turn 'tiger' in 2013 and raised the BSE Sensex target to 22,200 versus 21,600 earlier and Nifty target to 6,900 points as against 6,600 previously.
The investment bank expects reforms push would take India to 8% per annum growth over the next three years, improving to 6.7% in FY14 from 5.6% projected in FY13.
Corporate earnings growth may surprise on the upside around 16-17% as street was not factoring in improvement in EBITDA margins with neither falling core inflation nor reduction in interest costs getting built in, the note says.
Cyclical sectors are even cheaper and are at 10-year low as compared to defensives, it says.
It added Axis Bank, State Bank of India and property developer DLF to its top 10 ideas, replacing ICICI Bank Dr Reddy's Laboratories and HDFC Bank.
