Jefferies, Citi positive on these 5 sectors; see Nifty at 17500 by December 2022

Valuation concerns, US Federal Reserve rate hike might create periods of volatility and cap upside for Indian markets, global brokerages highlighted in a note. Even though benchmark indices could hit a fresh high in 2022 but could remain rangebound with a Nifty50 target at 17,500 for December 2022.

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The Indian markets have fallen by over 6 per cent from the recent high of 18,604 on the Nifty50 recorded in October 2021. Zee Business TV in a recent report highlighted that global investment bank, Citigroup sees the Nifty50 target at 17500 for December 2022.

The global investment bank is overweight on sectors like Financials, Industrials, Real Estate, and underweight on Consumer, and Materials.

Another global investment bank Jefferies is of the view that India has entered a period of an economic supercycle but concerns around valuation, as well as the Us Fed hike, might create periods of correction.

The investment bank is Overweight on financials, property, and auto. Tracking 7%+ GDP growth and 15%+ earnings growth for CY22/FY23 (estimated) could help the Indian markets to hit a new high in 2022.

Expensive Valuations:

The Nifty50 has rallied by over 24 per cent so far in the year 2021, and over 30 per cent in the last one year. The trailing 12 months P/E trades at 24.10x which is less than the peak of 28x registered in October when Nifty hit a record high.

If we compare it with global peers such as the US, China, or even MSCI EM, India P/E still trades higher. Indian equities are trading at 23.3x FY22E earnings. All key markets continue to trade at a discount to India, said a Motilal Oswal report.

Citigroup is of the view India's absolute and relative-to-EM valuations are both expensive. Consensus estimates have been unchanged for Q3 and Q4 upgrades

India still trades at high levels of 40%/18% YoY in FY22E/FY23E.

In the last 12 months, MSCI India (+35%) has outperformed MSCI EM (+1%). In the last 10 years, it has outperformed MSCI EM by 187%, said the Motilal Oswal note.

In P/E terms, MSCI India is trading at a 93% premium to MSCI EM, above its historical average of 59%.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)