2018 Year ahead - Consensus Outlook on Indian Equities : Credit Suisse, Goldman Sachs, Citi, BNP Paribas, Kotak, Morgan Stanley, JP Morgan

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2018 Year ahead - Consensus Outlook on Indian Equities

1. Credit Suisse: Indian equities are poised to begin outperforming again and hence reverse from seven-quarter long underweight recommendation on the market to a 15% above benchmark recommendation. Growth set to recover gradually following temporary disruptions. Earnings revisions have finally turned neutral again. Indian equity multiples can stabilize at around current levels and even begin to moderate with a sustained turnaround in EPS growth

2. Goldman Sachs: Remain overweight India. Following the October bank recapitalization announcement, expect India GDP growth to accelerate to 7.6% in CY2018 as investment recovers and the temporary effects of the GST implementation fade. Earnings growth should also recover to 18%, enabling the Nifty index to deliver 16% total return even with moderate valuation compression. Foreign outflows have stabilized and the domestic ‘financialization’ theme of household savings steadily shifting towards equities is running strong. Favor domestic cyclicals, quality PSU banks and infrastructure beneficiaries

3. Citi: There exist downside risks to our bottom-up forecasts for India’s benchmark indices earnings growth (+11%/19% yoy for NIFTY in FY18E/19E). With GST settling in and some progress on stressed asset resolution, directional improvement yoy should happen next year but the extent of recovery will be the key. Two key themes for 2018 – shift from unorganized to organized sector with a possible policy boost

4. BNP Paribas: The strong buoyancy in domestic flows are likely to keep the market stable for now. A gradual growth revival has begun implying that downside to earnings estimates in 2018 shall be far less than what was seen in 2017. The policy environment is possibly one of the best among EM and likely to remain so in the back drop of the ruling BJP’s political strength

5. Kotak: Expect 23% growth in the net profits of the Nifty-50 Index in FY2019 and 17% in FY2020 led by improved operating conditions in many sectors such as banking, pharmaceuticals and telecom that saw a sharp deterioration in their operating conditions over FY2016-18. Global commodity sectors should also witness strong earnings growth. That said, there is potential risk of de-rating of multiples in several sectors due to policy, regulatory and technological changes

6. Morgan Stanley: Combination of supportive global growth, improving capex, fiscal spending and a buoyant consumer augur well for growth in 2018.Earnings revisions breadth is likely to be in positive territory after spending nearly seven years in negative territory. Overweight Industrials due to positive view on private capex. Expect double-digit index returns in 2018

7. JP Morgan: India remains a long-term structural growth story. The recent reforms (GST, bank recap, infrastructure spending) implemented should start paying off over the next 6-24 months after near-term disruption. Overweight domestic cyclicals and Underweight defensives and exporters. Earnings growth estimates appear vulnerable to more cuts