While retaining its bullish view on the domestic equity market, ICICI Securities sees a high single-digit return from the benchmark equity indices BSE Sensex and NSE Nifty in the next 12 months. In a report on August 19, the brokerage said that the recent cool-off in key commodity prices comes as a breather for global equity markets.
ICICI Securities believes that the Nifty index may touch the 19,425 mark in the next 12 months, while the Sensex may hit 64,700 during the same period. Of late, the headline indices advanced over 10 per cent since June 2022 due to buying by foreign institutional investors and a fall in crude oil prices.
In the international markets, prices of brent crude oil plunged by over 18 per cent to $98 per barrel on August 15, 2022 from nearly $120 per barrel on June 30. On the economic front, high-frequency indicators also look encouraging in terms of GST collection, passenger vehicle sales order-book and e-way bill generation.
Monthly GST collection came in at a three-month high of Rs 1.5 lakh crore for July 2022 against Rs 1.45 lakh crore in June 2022. “As structural bets, we like capex linked capital goods, domestic consumption plays including autos and PLI oriented domestic manufacturing play,” ICICI Securities said.
Sharing its view on the ongoing result season, the brokerage added that management commentaries are upbeat on demand prospects and recovery in margin profile amid muted corporate earnings for Q1FY23, which witnessed low single-digit QoQ growth in top line and double-digit bottom line decline with pressure on gross margins. Nifty EPS for Q1FY23 came in at Rs 177 per share, down 14 per cent QoQ.
It further said that the major disappointment came in from the oil and gas sector wherein marketing margins came in lower than estimated. On the other hand, capital goods, metals & mining and pharmaceutical sectors surprised positively.
“Domestically, with a capex cycle revival on the anvil coupled with strong consumer demand across most categories. We remain constructive on the overall markets and believe the present market offers an attractive risk-reward play to build a long-term portfolio of quality companies, which have lean balance sheets, are capital efficient and have growth longevity,” ICICI Securities said.
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