Goldman Sachs has upgraded its view on India to "marketweight", with a target for the Nifty of 6,900 points.
Goldman notes optimism over political change is trumping economic concerns, given what the bank says are expectations that the opposition Bharatiya Janata Party, led by prime minister candidate Narendra Modi, could prevail in parliamentary elections due by May 2014.
Goldman also notes that external capital account pressures have moderated for now, and cites signs of a cyclical pick-up and structural improvements in the economy.
The investment bank likely notes the earnings outlook is stabilising, while noting that retail redemption pressures could moderate, among the factors behind its upgrade.
Goldman says technology, healthcare, and energy are its top sectors.
Goldman says it likes technology stocks including HCL Technologies and Tech Mahindra, oil and energy scripts such as Reliance Industries, Bharat Petroleum Corp Ltd and Coal India Ltd, banks including Yes Bank and IndusInd Bank and select auto and cement stocks.
The U.S. bank also included some mid-cap infrastructure stocks which are trading at inexpensive valuations such as Adani Power, NHPC Ltd, Materials stocks like Grasim Industries, and industrials stocks like Container Corp of India and Adani Ports and Special Economic Zone.
Copyright: Thomson Reuters 2013
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