BofA cuts Nifty target to 17,500, cites rupee depreciation, global slowdown

BofA Securities has revised lower its Nifty target from 18,500 to 17,500 citing “weakening macro, higher crude, rupee depreciation, global slowdown.”

“In the near term, higher crude, slowing global growth along with depreciating currency could create a downward spiral of macro risks - ballooning current account deficit and overshooting fiscal deficit. We see 40 basis points upside risk to FY23's budgeted fiscal deficit estimate of 6.4 per cent. We see CAD too at 3 per cent of GDP vs 2.5 per cent threshold driven by uncomfortably high trade deficit – 16 per cent export and 46 per cent import growth YoY (Apr-Aug). Thus, if crude and currency risks play out, they could deteriorate India macro & we see risks to capex upcycle thesis,” said BofA Strategist led by Amish Shah. “Given this, we believe further earning cuts cannot be ruled out. We cut our Nifty trading range to 16,500 – 18,500 (from 17K - 19.5K earlier) and lower our base target to 17,500 (from 18,500 earlier),” they added.

In August, BofA had revised its Nifty target upwards twice citing reduction in macro uncertainty. First from 14,500 to 15,600 and then to 18,500.