Mumbai, July 16
Nifty is expected to reach 26,889 by December this year, driven by a multi-faceted recovery in domestic demand, supportive monetary policies and focused fiscal initiatives, a report stated on Wednesday.
Reflecting the positive sentiment, “we have raised Nifty 12-month target to 26,889, valuing the Nifty at 2.5 per cent discount to 15-year average PE at 18.5x," PL Capital, a financial services provider, said in its report.
Domestically-oriented sectors, such as domestic pharma, select staples, banks, capital goods, defence, and power, will outperform in the near term.
“In the first quarter, government capital expenditure was front-loaded, recording impressive growth of 61 per cent in April and 39 per cent in May, supported by strong momentum in new project orders and a significant increase in defence spending," the report said.
At the same time, the Reserve Bank of India's (RBI) decision to reduce the repo rate by 100 basis points and announce a phased 100 basis point cut in the cash reserve ratio (CRR) has also played a role in sectoral growth.
However, the firm forecasts modest top-line growth of 2 per cent, supported by stronger gains of 15 per cent in EBITDA and 15.6 per cent in profit before tax (PBT).