Top Indian stocks, sectors to bet on, according to BNP Paribas

Defying global trends, Nifty 50 outperformed most of its peers in terms of year-to-date (YTD) thanks to strong domestic flows – both direct and indirect (MF). There are signs of a slowdown in inflows from retail investors. Retail flows turned negative in July 2022 after 10 months of consecutive inflows, SIP inflows also moderated after hitting a record high of 123 billion in March 2022.

Nifty is trading at 19.2x NTM PE, about 21% above its long-term average, bringing the earnings and bond yield spread below -2%, BNP Paribas pointed out in a note on the Indian strategy.

Amid slowing global demand, lofty stock valuations, slowing retail flows and no positive catalyst for our earnings estimates, the brokerage remains cautious on overall short-term market returns. term.

It remains selective with an overweight (OW) rating on the banking sector, given that it is trading below its average 10-year NTM PE, with improving credit growth and stronger, cleaner balance sheets .

“We are leaning towards a defensive positioning with OW in IT and Pharmaceuticals instead of Automotive (underweight or UW), Consumer Staples (UW) and Consumer Durables (UW), where valuation comfort after the recent rally is weak,” he added.

BNP Paribas is also UW on global cyclicals (energy and materials). While the domestic outlook for commodities and durable goods has improved due to moderating commodity costs, these sectors are trading at a steep premium to historical and would await better entry points.

Nifty’s rally continued into August, fueled by expectations of a spike in inflation and therefore a weaker tightening stance from central banks, although markets turned volatile towards the second half after the speech. of Jackson Hole by Fed Chairman Jerome Powell, in which he “emphasized the restoration of price stability, the maintenance of a restrictive policy for a while”.

His top stock picks are Axis Bank with a target price of 1,130, HDFC Bank (TP: 2030), Infosys (PT: 1,665), Bharti Airtel (PT: 885), Sun Pharma (PT: 1,074), ITC (TP: 360) and Whirlpool of India (TP: 2,260).

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

Catch all the trade news, market news, breaking news and latest updates on Live Mint. Download the Mint News app to get daily market updates.

More less

To subscribe to Mint Bulletins

* Enter a valid email

* Thank you for subscribing to our newsletter.

Post your comment