Goldman Sachs downgrades India to ‘neutral’, trims Nifty target on limited upside potential

Brokerage firm Goldman Sachs has downgraded the Indian market to “neutral” from its earlier recommendation of “overweight” and it has also trimmed its 12-month target for the Nifty 50 index to 27,000 from 27,500 earlier. The revised price target implies a potential upside of 9% from current levels.For the next three and six months, Goldman Sachs sees the Nifty 50 index at levels of 24,500 and 25,500 respectively.

Goldman Sachs said that while the structural appeal remains for the Indian market, but economic growth and corporate profits are decelerating. It further added that high starting valuations and a less favourable backdrop could limit the near-term upside for the market. The brokerage keeps quality, earnings visibility and targeted alpha strategies as its top priorities.

However, Goldman Sachs does not see a significant downside for the Indian markets given the strong support from domestic flows, although it does expect a “time correction” over the next three to six months.”

Domestic Institutions have absorbed most of the heavy selling that has come from Foreign Institutional Investors, which crossed $10 billion in the month of October itself with more sessions to go.

Goldman Sachs remains “overweight” on sectors like Autos, Telecom and Insurance. It has upgraded Real Estate and Internet to “overweight” as well.

On the flip side, it has downgraded cyclical sectors like Industrials, Cement, Chemicals, and Financials.