BofA's new target: Nifty50 to trade in 17,000-19,500 range this year

Brokerage has revised the mark upwards for the second time this month

BofA Securities has revised its Nifty50 target upwards for the second time this month, citing reduction in macro uncertainty. In its latest report, the brokerage has said that it expects the Nifty50 to trade in the 17,000-19,500 range, with base being 18,500, for the ongoing calendar year (CY22). The base target implies a 7 per cent upside from current levels. On August 11, BofA had hiked its Nifty50 target to 15,600 from 14,500.

In its latest note, its strategists -- led by Amish Shah -- said, “After the Jackson Hole symposium… most macro events of CY22 have either played out or provide visibility. Besides, India has few local elections (only Gujarat, Karnataka among large states) until November 2023, providing a window for continued reforms.”

The brokerage, however, doesn’t rule out a further downgrade to Nifty50 earnings estimates.

“Consensus has cut financial year 2022-23 and 23-24 (FY23/24) earnings growth for Nifty50 (our key concern) and is now in line with BofAe (estimates). While we expect further downside risks to earnings from spillover effects of weakening global macro and high base for Nifty50 profits for rest of FY23, it is unlikely to be steep in the near term, given the sharp correction in crude/commodities….We continue to prefer domestic cyclicals & defensive,” it has said.

BofA says five macro factors pose near-term risks to earnings. These are slowing global growth, sustained higher crude, higher interest rates, currency depreciation and government policies.

The brokerage expects Nifty50 earnings for CY23 to be Rs 923. It has assigned 20 times multiple — up from an earlier 17x --- to arrive at the 18,500 target.

In June, BofA had cut its Nifty50 target, from 16,000 to 14,500, citing tightening monetary conditions, recession fears and earnings downgrade as major headwinds.