Nifty 50 may possibly continue to scale new milestones more than the next 12 months, taking the index to a record higher of 17,250 by June 2022, stated domestic brokerage and study firm ICICI Securities in a report. Analysts at ICICI Securities think that enhancing income of India Inc. along with a conducive atmosphere for capital expenditure cycle would enable the benchmark index develop and attain fresh all-time highs. So far, considering that the March 2020 fall, Nifty 50 has more than doubled to attain an all-time higher of 15,901 this week.
Improving net profit to GDP
“Quarter 4 of the financial year 2021 is turning out to be the fourth consecutive quarter of earnings beat exceeding misses, which has resulted in PAT/GDP rising further to 2.8% despite an upward revision to FY21 GDP base,” ICICI Securities stated in the report. The net profit to GDP ratio is climbing from a two-decade low level of 1.6%. For the broader Nifty 200, the ‘Look through earnings’ have risen sharply by 120% driven by cyclicals in the January-March quarter. Sectors such as metals, cement, creating material, capital goods, and autos have posted sturdy quarterly benefits.
Environment conducive for capex cycle
On the financial front, ICICI Securities highlighted that the most current GDP print indicates financial recovery is led by investments as the actual investment price rose to a 2-year higher of 34.3% driven by robust building and manufacturing sector along with larger government spending. “Construction (14.5% YoY), manufacturing (6.9% YoY) and electricity (9.1% YoY) growth were robust in Q4FY21 as evidenced by GDP print, corporate results and robust merchandise exports,” they added. Further, the expansion of PMI manufacturing has been positive so far this fiscal and GST collections are enhancing. “We believe the environment for capex cycle is turning conducive at a macro level,” the report stated.
Declining actual interest prices, ample availability of economic sources for corporates for boosting investments as demand revives, countercyclical fiscal policy, conducive policy for boosting manufacturing, robust worldwide demand, and buoyant commodity cycle are some of the positive chalked out by ICICI Securities in favour of capital expenditure.
Top stock picks
Talking stocks, the brokerage firm has listed out 14 shares as its top rated picks. These include things like financials, industrials, and even auto stocks. These are SBI, Axis Bank, HDFC Bank, NTPC, PTC India, L&T, Ultratech, Bharti Airtel, Tata communications, GAIL, Tata Motors, TVS Motors, Motherson Sumi, and Jyothy Labs.
(The stock suggestions in this story are by the respective study and brokerage firms. TheSpuzz Online does not bear any duty for their investment guidance. Please seek the advice of your investment advisor ahead of investing.)