In recent days, the Government has acted boldly, undertaking several difficult reforms such as fuel price hike and FDI liberalization in several sectors among others. These steps send out a strong signal to investors, ratings agencies and even to RBI that the government is serious about India’s macro environment. We expect more steps to follow which should help the re-rating of Indian markets. Accordingly, we are changing our stance from ‘sell on rise’ to ‘buy on dips’ with year-end Nifty target of ~5850. We recommend increasing beta in the portfolio by adding rate cyclicals and trimming holdings in defensives such as FMCG and pharma.
Regards,
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