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BNP expects the Sensex to reach 44,500 in 2020 – a potential upside of 13 per cent for the benchmark. The French fund house has maintained its overweight stance on China, India and Thailand, while upgrading South Korea to overweight from underweight and downgrading Indonesia from overweight to neutral.
After a 41 per cent rally over the past four months as against 9 per cent gains by the Sensex, RIL is reaching BNP’s price target. A likely moderation in refining margins could halt the stock’s rise while Indian IT, on the other hand, could benefit from reviving business spending in the US, said BNP Paribas.
Infosys is the cheapest among the large-cap Indian IT companies, it added.
The brokerage prefers HDFC to IndusInd Bank. The latter’s share price, after a 16 per cent rally over the past two months, appears to have factored in the loan and fee income growth, but investor concerns about asset quality seem to be mounting, according to BNP.
BNP prefers HDFC given its steady loan growth, strong capital position, stable net interest margins (NIMs), and a relatively stable asset quality. Its major subsidiaries – bank, life insurance and AMC – also continue to do well. Furthermore, it is the best way to play a potential revival of the Indian real estate market, BNP said.
After the recent 30-40 per cent tariff increases by Indian telecom companies, BNP believes Bharti Airtel could be the biggest beneficiary of market share gains. On the other hand, telecom tariff increases could impinge on spending power of Indian consumers, especially in the semi-urban areas, according to BNP. For Marico, benefits of lower raw material costs should start tapering as crude is stabilising and palm oil costs have spiked, the brokerage added.
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