Indian equities could face further downside before entering a consolidation phase, amid rising inflation risks, geopolitical uncertainty, elevated commodity prices and volatile foreign investor flows, according to a report by PL Capital. The brokerage has revised its 12-month Nifty 50 target to 27,589 from 27,133 earlier, while cautioning that attractive valuations alone may not trigger an immediate recovery.
The Nifty 50 has declined 8.2% over the past six weeks and 6% year-to-date, making India one of the weakest-performing major markets. Persistent foreign institutional investor (FII) selling, concerns over deficient monsoon rainfall, rising crude oil and agricultural commodity prices, higher bond yields, and the escalating Iran-US conflict have weighed on sentiment.
PL Capital’s high-conviction stock picks offer potential upside of up to 52.8% based on target prices and 9 October closing levels. Among large-cap stocks, GE Vernova T&D India leads with a projected upside of 41.3%, followed by ICICI Bank at 36.5% and Britannia Industries at 36.4%.
In the mid- and small-cap category, CESC tops the list with a potential upside of 52.8%, followed by Amber Enterprises India at 43.3% and Healthcare Global Enterprises at 39.2%.
“We are removing Engineers India and Supreme Industries from conviction picks. We are adding Britannia Industries, Bharat Electronics, GE Vernova T&D India and Mahindra Logistics in conviction picks, ” said PL Capital in its report.