Banks, Telecom, Healthcare — Citi's Top Themes As 13% Upside Seen For Nifty 50 After 'Meaningful' Correction

Banks, telecom and healthcare are Citi's preferred themes after a "meaningful" market correction from peak levels is set to make way for positive growth, while being 'underweight' on information technology, metals and consumer discretionary.

Post the correction, valuations for large-cap stocks are reasonable and the top-down drivers for consumption growth due to direct income tax cuts, interest rate cut, and decline in inflation as well as public capex recovery from December are improving, it said. "We remain constructive," Citi analysts Surendra Goyal and Vijit Jain said in a note on Monday.

They see 13% upside for the Nifty 50 by December this year, with a target of 26,000.

Among individual stocks, the brokerage has given 'buy' on HDFC Bank Ltd., Kotak Mahindra Bank Ltd., Maruti Suzuki Ltd., Endurance Technologies Ltd., HDFC Life Insurance Co., and Torrent Pharma Ltd.

Sectors In Play

• Banks: Stress in unsecured credit like credit card and personal loans expected to stabilise. Secured retail and MSME asset quality remains strong.

• Consumer: Recovery is anticipated in the second half of next fiscal. While consumers are downsizing due to inflation, there is high competition in discretionary segments as companies prioritise market share over margins in the short term.

• IT: A modest recovery is expected with discretionary spending improving in some areas.

• Internet: Travel demand remains strong and intense competition in quick commerce expected in the near term.

• Cement: Government spending with a recovery in capex has boosted demand.

• Autos: Rural demand is stronger than urban. Macro support for consumption should benefit auto demand, even as auto ancillaries are cautious about global market trends.

• Healthcare: US tariffs on Indian-made generics are unlikely due to high dependency on India and lack of American manufacturing infrastructure. Moreover, hospital companies are optimistic about growth.

• Insurance: Life insurers remain confident about sustained mid-teen Value of New Business (VNB) growth.

• Real Estate: New launches were delayed in the first nine months of FY25 due to approval issues. Due to this, pre-sale guidance at risk for most developers.