Global financial services major Nomura has pencilled in a double-digit gain for Indian markets by the end of the financial year. The target for the National Stock Exchange's Nifty index is 12,900, an 11 per cent gain from current levels.
"Portfolios geared away from consumption, which is facing a slowdown, and towards a pick-up in the investment cycle may benefit," said Saion Mukherjee, managing director and head of India equity research at Nomura, speaking at a media roundtable in Mumbai on Tuesday.
This would have the broader market valued at 17 times estimated earnings for 2020-21. Returns are more likely to come from specific firms which are poised to do well rather than a uniform, market-wide surge.
"Our approach has been a lot more selective," he said.
Infrastructure is a segment which he expects will do well. He is overweight on construction and companies involved in water purification and other water projects. He is similarly positive on healthcare and is also overweight on financials.
The financials segment has been hit by liquidity issues plaguing the Non-Banking Financial Company (NBFC) space. Better-placed intermediaries would benefit from the declining cost of capital. They may also be able to capture market share from rivals who are less well-placed, according to Nomura.