A shaky start, a brilliant comeback and a stuttering close. That’s the best way to describe the performance of the Indian market in 2016. The NSE Nifty 50 index closed the year 3 percent higher, well below its peak.
Wide-Ranging Targets
The events of 2016 have left market watchers polarised about what’s in store in 2017. The Nifty could rise to 9,506 as per the median forecast of 11 brokerage firms polled by BloombergQuint, while the downside is limited to 7,550.
Centrum Broking is the most bullish with an upper-end target of 10,250, which translates to a gain of 25 percent over 2016's close of 8,185.80. Sharekhan is the most bearish, expecting the Nifty to fall all the way to 6,700.
Joker In The Pack
Brokers in India will keenly watch two policymakers - U.S. President-elect Donald Trump and Indian Prime Minister Narendra Modi – besides the usual suspects like crude oil prices, the level of the rupee, and foreign fund flows.
Rupee Realities
The Indian currency is expected to weaken further, with almost all brokerage houses expecting the rupee to breach the 70 to a dollar mark in 2017. The median forecast for the rupee stood at 71.18 to the U.S. dollar.
Crude: Tight Range
Crude prices are expected to stay firmly above the $50 per barrel mark, with at least two brokerages expecting prices to rise above $60 per barrel. The most bearish call is for crude to fall to $49.6 per barrel in 2017.
Commodities: Wait-And-Watch
Goldman Sachs recommended going overweight on commodities in 2017, its first bullish call on the asset class in five years. While the financial major is betting on a pickup in global manufacturing, not all Indian brokerage houses share the optimism, with only 27 percent of the analysts polled expecting the asset class to rise in 2017.
Gold To Shine Bright
Most participants said gold will triumph over equities once again in 2017 with a maximum upside of 22 percent.
Sectoral Bets
Eight out of the 11 brokerage houses polled are positive on banking or other financial sector stocks in the new year. Export-oriented pharmaceutical stocks emerged as another favourite, despite the regulatory uncertainties in the U.S. The third most favoured bet is the power equipment/transmission space.
On the flip side, analysts advise caution on the the real estate sector, as they expect companies to feel the pinch of the cash crunch in the near term.
Top Stock Picks
Bank of Baroda, made it to the list of top stock recommendations of two brokerage houses, while four other large-cap banks are also in the list of stocks recommended.
Tata Consultancy Services Ltd. is the only technology stock recommended by analysts BloombergQuint polled.
Also Read: 2016 In 16 Charts
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