Investment bank BNP Paribas has come out with its market outlook for Indian equities in 2013. The bank expects Sensex to attain a target of 21,300 by December 2013, indicating a modest 10 per cent growth from current levels of around 19,300.
"At our target, the Sensex would be trading at 14.1 times one-year forward price earnings and 2.28 times one-year forward price by book value," the investment bank said in a report.
BNP Paribas' Sensex target is slightly ahead of Citi's year-end target of 20,800, but in sharp contrast with the 25 per cent gains the Sensex has witnessed year-to-date.
Speaking to NDTV's Prashant Nair, Manishi Raychaudhri, strategist and head of research at BNP Paribas Securities said moderation in inflation, rebound in earnings growth, benign commodity prices and global liquidity injections are likely to drive Indian stocks in 2013.
Here are some snippets from BNP Paribas report.
The Sensex is nearly 4 per cent higher than BNP 2012 target of 18,500. BNP expected cyclical variables to support the markets, which didn't happen.
1) Beginning of monetary policy easing
2) Moderate recovery in investment cycle in second half of fiscal 2013
3) Sweet spot on global liquidity infusion and benign commodity prices
4) Earnings estimates are bottoming out
Commodity price spike, trade deficit, potential populism in pre-election year.
Overweight: Autos, industrials, IT
Underweight: Metals and energy
BNP has excluded Reliance Industries from its model portfolio. ONGC and Bajaj Auto have been included.
BNP Paribas top picks for 2013: ICICI Bank (target Rs 1216), LIC Housing (target 322), Sun Pharma (target 808), M&M (target 1100), and Wipro (target 420).
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