Analysts Cut Target Price For 70% Of India Stocks In October

Analysts lowered target price for more than two-thirds of Indian stocks last month—the worst cut in at least three years—amid rising volatility in the market.

Target prices were cut for 70 percent of the 276 stocks tracked by at least 10 analysts, according to Bloomberg data. That's when the benchmark Nifty 50 Index declined for the second straight month in October—the most volatile this calendar year. The benchmark index declined 4.98 percent last month on concerns over an escalating trade war, higher crude oil prices and a depreciating rupee. A change in mutual fund investment classification and the recent liquidity crisis among non-bank lenders after defaults at IL&FS Ltd. also contributed to the selloff.

Target prices were cut for 195 stocks—the most for Dish TV India Ltd. Analysts lowered estimates for the country's largest direct-to-home operator by 40 percent on the back of muted earnings and increasing competition from new rival Reliance Jio Infocomm Ltd.

Also, the three state-run oil marketers and six financial sector stocks witnessed a cut in forecast in the range of 19-39 percent.

Target prices were revised upwards for only 71 companies—the most for technology and pharmaceutical sectors. Estimates for NIIT Technologies Ltd. were hiked by nearly 14 percent on strong September quarter numbers. V-Mart Retail, the only retail stock among the top 10 companies with highest upgrades, witnessed an 11 percent hike in target price as it expanded stores beyond metro and Tier-I cities.

Shift In Investor Preference

ICICI Bank, India's largest private lender, got five new ‘Buy' ratings in October after returning to profitability in the September quarter and a change in leadership. Maruti Suzuki India Ltd. and Mindtree Ltd., too, received fresh ‘Buy' ratings last month, but that could be because of a fall in share prices.

Strong borrowing capability and growth in the home loan segment renewed investor confidence on LIC Housing Finance that received five new ‘Buy' ratings. L&T Infotech got six new ‘Buy' ratings on strong September quarter numbers.

Analysts kept a close watch on Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. after the government asked them to bear the partial impact of a rise in retail fuel prices. The oil marketers have seen as much as 13 downgrades in the last one month.

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