Nomura sees Nifty at 11,380 by December 2018; HDFC Bank, RIL among top bets

Nomura expects the consolidated earnings for Nifty companies to rise 51% over FY18-20, largely driven by low base of financials.

Global research house Nomura sees a limited upside for the markets from here on. Their recent India Strategy report co-authored by Saion Mukherjee, Neelotpal Sahu and Sanjay Kadam, pegs the Nifty50 target at 11,380 levels by December 2018.

“We remain cautious on valuations. Nifty’s 12-month forward price-to-earnings (P/E) multiple, at 17.5x, is close to more than one standard deviation above its eight-year average on expected earnings. The gap between 10-year government bond yields and earnings yield has expanded and is close to the lowest level since September 2014, indicating relative overvaluation. Our Nifty target of 11,380 is based on a