Sensex to touch 54,000 by 2018, but range bound for next few months: BofA-ML

Bank of America-Merrill Lynch (BofA-ML) said on Tuesday that the Indian equity benchmark S&P BSE Sensex is likely to touch 54,000 by end-2018, but will be rangebound-to-negative over the next few months. 

BofA-ML highlighted consensus overweight and lack of on-ground change since formation of the new government as the key near-term risks for Indian markets. 

The investment bank said that the stock rally on positive events such as Union budget and Reserve Bank of India’s (RBI’s) rate cut have been sold into. The Sensex has fallen 2.1% from its record high of 30,024.74 on 4 March despite RBI’s surprise rate cut. 

BofA added that clear roadmap, which may help in increasing spending in sectors such as roads, railway and defence, accompanied by rate cuts would drive recovery in the long term. 

The investment bank remains overweight on rate-sensitives and operating leverage plays such as autos, banks, cement and oil companies. It recently added pharma as an overweight to play a tactical consolidation in the market.

BofA-ML’s top picks include ICICI Bank Ltd, Lupin Ltd, Bharat Petroleum Corp. Ltd and UltraTech Cement Ltd. Reuters