Nifty has fallen 4 per cent in February but this is no surprise for Goldman Sachs. The foreign brokerage firm pointed out in a February 5 note that Nifty has fallen in the range of 1-7 per cent ahead of the Budget for last eight out of 10 Budgets. Within sectors, exports-led companies and fast moving consumer goods have outperformed, while high beta cyclical sectors such as realty, banks and metals have underperformed Nifty, it said.
Goldman Sachs remains overweight on India and estimates 12-month Nifty target of 9,000. This is partly because MSCI India’s current valuation of 16 times one year forward price to earnings multiple is close to average valuation.
On December 2015 quarter performance, Goldman said that the same has been disappointing, led by industrials, telecom, consumer discretionary and staples. “About 70% of the MSCI India cap has reported with more misses than beats so far. 53 per cent of companies that have reported so far missed earnings estimate while only 28 per cent beat,” it pointed out.
MSCI India’s 2016 earnings have been cut by 3 per cent. Only few stocks like GAIL, RIL, Marico and Infosys have witnessed earnings upgrades.