Brokerages on mkt after demonetization:
Surendra Goyal – CITI
* We think markets will remain range bound near term
* We remain constructive medium term, given reform momentum (GST, demonetization, NPA resolutions), macro, monsoons etc
* We lower multiple to 15x (from 17x) one year forward consensus earnings to factor in uncertainty;
* Roll forward 6m – our Sensex target remains 30k (Sep 17)
* FY17E GDP growth is expected to come down to 7.2% (vs earlier expectation of 7.7%)
* We have been UW on high multiple sectors like consumer.
* We lower weights on cement and autos and increase our OW stance on Energy
* Key OWs remain Financials, Healthcare and Energy
* UWs remain IT Services, Materials and Consumer.
Govind Chelleppa - Jefferies
* The fight against corruption will extend beyond demonetization
* The implications for the listed universe isn't too rosy, at least in the nearterm
* Wealth destruction and risk aversion mean growth will slow, primarily in consumer discretionary
* Banks will hurt more from growth slowdown and asset quality issues than they benefit from higher CASA and rate cuts
* Low end consumption might be the lone bright spot
* We set a new Nifty target of 7500 .
* We expect big challenges to growth in FY17 and FY18
* We downgrade financials to neutral and discretionary to underweight and upgrade consumer staples to overweight
* IT continues to be our other key overweight
* Top down, we now expect index earnings to grow 8% (cons. at 13%) in FY17E and 15% (cons. 20%) in FY18E.
Mahesh Nandurkar – CLSA
* Initial feedback indicates a significant double digit impact over the next couple of months for auto demand
* Other consumer companies and financials warned of a near-term impact although most expect demand should start normalising over the next one to two quarters
* Most investors also view the demonetisation move as good long-term but with a short-term negative impact.
* We believe the expected market weakness over the next quarter or so to be a good entry point for long-term investors.
Bharat Iyer – JP Morgan (Year Ahead – 2017)
* Going into CY17, we see better rural as well as urban demand and enhanced wages for government employees.
* We are at the cusp of a recovery in the earnings cycle.
* Earnings growth is expected to be 16% for FY17 (E) and 21% for FY18 (E) for MSCI India.
* We prefer to play the potential economic recovery and rate cycle easing through HDFC Bank and Yes Bank in financials sector.
* In the discretionary space, M&M is key beneficiary of rural demand revival
* Vedanta is expected to register strong volume growth.
* For DLF, residential business will move towards near zero debt on the back of CCPS transaction.
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