paragraph

Bank of America Securities has cut Nifty50's target by 2,100 points for December 2022 to 17,000 from 19,100 earlier on expectations of a fast rate hiking cycle by the US Federal Reserve. It expects US Fed to hike rates by 100 bps and 175 bps in FY22 and FY23, respectively.

While Fed/RBI hiking cycles since 1994, suggests market valuations could contract, BofA added that it also suggests that market downsides are blunted if supported by robust earnings growth. India is well placed and is supported by 'growth-focused' fiscal/monetary policies, noted the brokerage.

BofA's current <a target="_blank" href="https://mintgenie.livemint.com/indices/details/NSI/nifty-50-I0002">Nifty</a> target is just about 2 percent higher than the index's closing level of 17,352.45 on February 15, 2022.

"With market breadth likely to narrow, we raise defensive skew marginally but remain constructive on domestic cyclicals," the report stated. The brokerage upgraded healthcare and staples and downgraded ratings on auto and IT to underweight. It remains overweight on industrials and financials.

BofA's US economists are now expecting seven rate hikes in the calendar year 2022 (CY22), starting March, and a further four hikes in the calendar year 2023, of 25 basis points (bps) each. Also, there are concerns around a potential 50 bps hike in March, 100 bps by July, and inter-meeting hikes, among others.

Within India, it expects the Reserve Bank of India (RBI) to hike by 100 bps by March 2023, said the note

Valuation analysis

BofA's analysis of four FED/RBI hike cycles since 1994, suggests market valuation contracts if valuations are above long-term averages before the start of the hike cycle. Given current market valuations are close, it believes that the valuation contraction is likely.

However, the note added that there have been instances of Indian markets delivering positive returns even during rate hikes by the RBI or the Fed, driven by earnings growth, even as valuations contracted.

Robust earnings, supportive policies to cap market fall

"We believe India's corporate earnings could structurally outpace nominal gross domestic product (GDP) growth, led by the start of multi-year capital expenditure (capex)/credit growth/start-up cycles and 'growth-focused' fiscal and monetary policies," the note said. India's CY22 earnings are likely the best among emerging markets, it added.

"A strong outlook is reflected in our macro analysts maintaining their views of 8.2 percent real GDP growth in 2022-23," BofA forecasted.

However, it added that political stability is a crucial risk, the market's breadth could narrow, and volatility could rise further.

The brokerage has 'buy' calls on HDFC Bank, ICICI Bank, SBI, Kotak Bank and Axis Bank among banking stocks; HDFC, Shriram Transport Finance, LIC Housing and Mahindra Finance among housing finance companies; L&amp;T, Adani Ports, Siemens, BEL, and Cummins among Industrials and on NTPC in utilities.

Meanwhile, Brokerage house Axis Securities has given a year-end (Dec 2022) <a target="_blank" href="https://mintgenie.livemint.com/news/markets/axis-securities-picks-top-stocks-for-february-says-nifty-may-hit-20-200-by-dec-151644303535278">target of 20,200 for Nifty50</a>.

As per the brokerage, earnings momentum would be the critical factor for the market performance moving forward. While it has been strong in the past few quarters and largely in line with expectations for the current quarter, the future outlook of the earnings trajectory remains more critical at this juncture, it added.

Target slashed! BofA Securities cuts Nifty December target to 17,000; bullish on financials, industrials

BofA Securities expects US Fed to hike rates by 100 bps and 175 bps in FY22 and FY23, respectively.

Wealth Destroyer! This pharma stock tanked 58% from its 52-week high hit in April 2021

CLSA upgrades HDFC to ‘buy’, sees 30% upside on improving affordability in real estate sector

Market Debut: Vedant Fashions lists at ₹935 on NSE, 8% premium against issue price

Before Market Opens: 9 things to know at 9 am on Feb 16, 2022

Sensex rallies 1,736 points, Nifty jumps 3% as Russia-Ukraine tensions de-escalate

Investor Trends: FPIs and MF took opposing sectoral bets in the December 2021 quarter

Centre only has ₹2 lakh crore worth of PSU equity left to monetise, says Dipam Secy

Crash alert! These Nifty50 stocks tumble over 20% from their 52-week highs

Asset allocation amid volatility: Here's what to do with your equity, gold, debt investments

Market Wrap: Sensex pares intra-day gains to settle over 100 points lower

The 30-share BSE index declined 100.42 points or 0.19 per cent to settle at 53,134.35. During the day, it jumped 631.16 points or 1.18 per cent to 53,865.93.

Bank of England Says Global Outlook Has ‘Deteriorated Materially’

The Bank of England said the global economic outlook has deteriorated materially after surging commodity prices pushed up inflation around the world, posing a further downside risk in months ahead.

Vauld to be rescued? Crypto lender Nexo says plans to buy it

Nexo, which is based in London, said it would buy up to 100% of Vauld and reorganize its future operations with the aim to accelerate its deeper presence in Asia. It did not say when the deal would close.

These penny stocks defied weak market sentiment; surged over 1000% in this year 

Three penny stocks rallied over 1,000 percent in the first half of 2022 despite the ongoing volatility in the domestic equity markets.

Stock Market: Is it time to get greedy and buy shares?

<ul><li>Although there are some charts that suggests that markets may not have bottomed as yet; however, based on the past trends, they may bottom out in next few months and therefore the next 6-12 months look extremely crucial from the view of wealth creation over the next 3-4 years.</li></ul>