BofA’s US economists earlier this month revised its outlook for the world’s largest economy in favour of a ‘soft landing’. US Gross Domestic Product (GDP) in 2023 could grow 2.0%, 0.7% in 2024, and 1.8% in 2025, they said.
“With one of the key risks of a US/global recession now out of the way, there is potential for Nifty’s valuations to re-rate,” said the brokerage in a client note dated August 8. “Historically, Nifty’s returns have mostly been positive at least three months prior to the end of US recession as well as during the phase of Fed’s penultimate rate hike to six months after the start of rate cuts (current phase).”
BofA’s Nifty target implies an upside of 4.7% from the index’s Tuesday’s closing of 19,570. The Nifty fell 26.45 points, or 0.13%.
BofA said the market cap of a third of the Nifty’s components is still below long-term average valuations and a few of those are still buying opportunities.
The brokerage is overweight on financials, industrials, select autos, and healthcare stocks while cautious on IT, metals, cement, telecom, utilities, and materials.