Kotak Securities expects 2018 to be better than 2017 due to the fading effects of demonetisation and the Goods and Services Tax, government investment in the rural economy and a pick-up in the investment cycle during the second half.
Consequently, it expects a modest recovery in the macro-economic position and an earnings recovery in select sectors in FY19. Also, significant earnings downgrades are unlikely to happen going ahead, it estimated.
Bullish on banking, insuranceKotak Securities expects 11 per cent upside in the Nifty 50 by next December and is bullish on sectors such as banking, insurance, housing finance, auto ancillaries, construction, branded apparels, pharmaceuticals and agriculture. However, it sees crude oil at $70, rising yields in the US, rise in domestic inflation, slowdown in government expenditure, disappointing corporate earnings and lesser-than-expected GST collections as big risks to its predictions.
Overall, it is bullish on equities as an asset class and expects the share of equities in the total financial savings to rise in the coming years from the current 4 per cent.
The benchmark Nifty 50 has given 28 per cent till date in 2017 and has been the best-performing market globally.