Best of FII flows yet to come; RIL, banks look attractive: Yes Securities

“India holds a concrete advantage over other markets and India’s manufacturing will gain from production-linked incentives (PLIs) and global re-shoring,” the note stated.

The moderated retail participation in the market (owing to decreased demat accounts) suggests that market is not in an overheated zone. In such a scenario, heavyweight stocks like Reliance Industries (RIL), Banks, and IT Services look attractive, it added.

As per the report, central banks will pause on rates soon while governments will boost growth by offering stimuli through infrastructure spending, and loan guarantees, among others. It also hints that RBI will not necessarily raise rates to curb inflation, but to match Fed-raising rates. In this regard, the brokerage house sees a 0-25 basis points (bps) hike by the Reserve Bank of India (RBI) to 6.25- 6.50% Repo level.

Foreign portfolio investors sold a net $18 billion this year of Indian assets but turned buyers in November and December. Meanwhile, Yes Securities is bullish on the equities and said that the Indian stock market has shown remarkable resilience throughout major parts of the last three years. During Nifty’s journey to a new high, markets tend to be sector agnostic, however midcap and smallcaps tend to do much better than the Nifty.

Nifty 50 index struck a record high in December and is up 5% this year, joining an exclusive group of markets worldwide that rose in spite of interest rate hikes and slower growth. In contrast, MSCI’s broadest index of Asia-Pacific shares outside Japan shed 19%. The world-beating stocks performance has helped India to double its weight in MSCI’s emerging markets index to 16% from 2019, as per Reuters.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.