Research team at Deutsche bank led by Abhay Laijawala and Abhishek Saraf have raised the December 2014 Sensex target to 28,000.
India has delivered one of the most decisive electoral verdicts since 1984 with the pre poll NDA alliance surpassing the most optimistic forecasts.
"The historic verdict hence justifies a re-rating of the Indian equity markets. Over the past decade a fragmented coalition with differing economic ideologies had been the key reason for the economic malaise. Thus equity markets are now likely to react to the election verdict with euphoria with Economy and the investment cycle being at the center focus of the new government," Deutsche Bank said.
The economic turnaround and revival of manufacturing is likely to take center stage and hence the Research team has recommended investors to intensify focus on domestic cyclicals and policy improvement plays.
Banks remain their biggest overweight as the sector is highly levered to government policies and a decisive-mandate induced political stability.
They expect Oil & Gas to benefit from accelerated diesel price rationalization and economic recovery and hence suggest as one of the key sectors overweight.
With the urgent need for manufacturing revival investment revival, they suggest investors to overweight Industrials and Infrastructure.
They are also overweight materials (through cement and metals) as a derivative play on economic recovery.
Their key underweight’s are Consumer Staples, Telecom and IT Services.
TOP large cap Picks- Axis Bank, BoB, PNB, REC, L&T, Siemens, Ultratech, Powergrid, RIL, BPCL, Tata Steel, Maruti, TCS, Titan.
Top Mid cap picks- Apollo Tyres, CESC, HPCL, Jain Irrigation, LIC HF, Shree Cement.