{"id":21006,"date":"2024-10-23T11:22:18","date_gmt":"2024-10-23T05:52:18","guid":{"rendered":"https:\/\/bigbreakingwire.in\/?p=21006"},"modified":"2024-10-25T14:05:26","modified_gmt":"2024-10-25T08:35:26","slug":"goldman-sachs-and-bernstein-downgrade-indian-market-imf-revises-2024-forecasts-growth-uplifts-for-u-s-brazil-and-uk-downgrades-for-china-japan-and-eurozone-global-gdp-steady-at-3-2-india-at","status":"publish","type":"post","link":"https:\/\/bigbreakingwire.in\/goldman-sachs-and-bernstein-downgrade-indian-market-imf-revises-2024-forecasts-growth-uplifts-for-u-s-brazil-and-uk-downgrades-for-china-japan-and-eurozone-global-gdp-steady-at-3-2-india-at\/","title":{"rendered":"Goldman Sachs and Bernstein Downgrade Indian Market, IMF Revises 2024 Forecasts: Growth Uplifts for U.S., Brazil, and UK, Downgrades for China, Japan, and Eurozone, Global GDP Steady at 3.2%, India at 7%"},"content":{"rendered":"
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Goldman Sachs has downgraded Indian equities from Overweight to Neutral, citing decelerating economic growth and corporate profits. While India still holds strong long-term structural appeal, high valuations and a less favorable market environment may limit short-term gains.<\/p>\n\n\n\n

Despite the potential for a price correction being low due to robust domestic inflows, the market is likely to undergo a ‘time correction’ over the next 3 to 6 months. Goldman Sachs has revised its 12-month NIFTY target to 27,000, down from 27,500, implying a 9% upside. For the shorter term, the 3-month target is 24,500 (-1%) and the 6-month target is 25,500 (+3%).<\/p>\n\n\n\n

Goldman Sachs has expressed concerns about corporate earnings due to worsening sentiment, a rising number of earnings cuts, and a weak start to the earnings season. They believe that while a significant market price drop is unlikely due to strong domestic investment, the market may see some corrections over the next three to six months.<\/p>\n\n\n\n

In October, foreign investors withdrew a record amount from the Indian stock market, surpassing outflows in the rest of Asia. Goldman Sachs has lowered its 12-month target for the Nifty index to 27,000, down from 27,500, suggesting a potential 10% gain from its recent closing price.<\/p>\n\n\n\n

Current valuations for MSCI India are at high levels, with forward earnings at 24 times. Historical data indicates that high valuations combined with downgrades in earnings typically lead to lower returns over the next three to six months.<\/p>\n\n\n\n

USA has overtaken India as the world’s most expensive market, with India slipping to second place.<\/p>\n\n\n\n

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Moreover, ongoing tensions in the Middle East, regional market shifts, regulatory measures by SEBI, and significant upcoming equity supply could limit immediate market gains. Concerns about a slowing economy are heightened by a decline in tax collections, with September’s Goods and Services Tax growth at a 40-month low of 6.5%. Additionally, the growth of eight key industrial sectors has also slowed.<\/p>\n\n\n\n

Nifty companies are expected to report flat earnings for the second quarter, with any potential margin improvements likely to fade due to high comparisons from previous periods, making investors more cautious. Foreign institutional investors have been net sellers for 17 consecutive days, selling nearly Rs 97,500 crore since September 27, according to NSE data.<\/p>\n\n\n\n

Sectors like Autos, Telecoms, Insurance, and Realty have been upgraded to Overweight, while cyclical sectors such as Industrials, Cement, Chemicals, and Financials have been downgraded. Investors are advised to focus on sectors with strong earnings visibility, prioritize quality, and adopt targeted alpha strategies to navigate the current market environment.<\/p>\n\n\n\n

Bernstein Research downgraded the Indian stock<\/a> market from \u2018neutral\u2019 to \u2018underweight,\u2019 citing concerns over record high valuations, increased risks from crowding in large-cap stocks, and rising market downgrades, making it vulnerable in the near term.<\/p>\n\n\n\n

UBS Global Wealth Management<\/strong> stated that it\u2019s the right moment to \u201cbuy the dip,\u201d as the recent slowdown in India\u2019s growth and earnings seems to be temporary. Christopher Wood, global head of equity strategy at Jefferies Financial Group Inc., noted earlier this week that India is expected to be the most appealing stock market for the next decade, primarily because of its earnings prospects.<\/p>\n\n\n\n

UBS Global Wealth Management upgraded its view on global stocks from “neutral” to “attractive.” They did this because the U.S. economy is growing well, and major central banks are easing their monetary policies.<\/p>\n\n\n\n

UBS analysts mentioned in a note on Thursday that the economy is doing better than expected, and the central banks are taking action to support this growth, which makes them confident that the positive conditions will continue.<\/p>\n\n\n\n

The IMF revised its 2024 economic forecasts<\/a>, raising growth estimates for the U.S., Brazil, and Britain, while lowering projections for China, Japan, and the euro zone. Despite these changes, global GDP growth remains at 3.2%. The report, released as IMF and World Bank leaders meet, flags risks from conflicts, trade tensions, and tight monetary policies. India’s growth outlook remains steady at 7.0% for 2024 and 6.5% for 2025.<\/p>\n\n\n\n

India revenue growth<\/strong> for the quarter ending September 30, 2024, is estimated at a slower 5-7%,<\/strong> the weakest since Q2 of fiscal 2021, according to Crisil’s Market Intelligence<\/strong> and Analysis report. This decline, the slowest in four years, was driven by muted performance in construction, industrial commodities, and investment-linked sectors, which grew only 1%. Factors like the monsoon, weak cement prices, cheaper Chinese steel imports, and reduced government spending post-elections contributed to the slowdown.

Agriculture sector revenue dropped by 20-22%, while exports and consumer discretionary sectors showed growth. Exports grew by around 5%, contributing to a 70-90 bps profitability boost. Crisil estimates EBITDA margins for the quarter at 21-21.5%, with a full fiscal recovery of 50-150 bps expected by 2025.<\/p>\n\n\n\n

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Bernstein Downgrades Indian Stock Market to ‘Underweight’ Amid Valuation Concerns<\/a><\/blockquote>