Brokerage house Bank of America Merrill Lynch is bullish on India with an index target of 54,000 by end-2018 and believe that Investors must await dip in the market. It feels India is vulnerable to a near term global correction as too many global fund managers own shares in this market. “One of our near term concerns has been that investors are very overweight India; this makes India vulnerable to any near term global correction,” says the Merrill Lynch note, adding that a macro recovery appears to be some way off. “While we are structural bulls on India with an index target of 54,000 by end-2018, we have been highlighting that we see the market being range-bound to negative over next few months,” the note further says.
Global Emerging Markets (GEM) funds are nearly 420 bps overweight India BoFA’s view is that this makes India vulnerable to any near term global correction. India remains the most owned market in GEM by a wide margin.
“Investors, post their company meetings, seem to agree with our view that valuations were probably pricing in too much of good news. While we think the market will remain expensive through the year, we think it will consolidate for the next 3-6 months,” the note says. Merrill Lynch is bullish on auto, banks, cement and oil. It expects pharma shares to do well near term as the market consolidates.
There always risk associated with investing directly in stock markets and there are many ways to participate in this bull run. And one such way is investing through mutual funds, whether it is lumpsum amount during heavy corrections or SIP. We have already seen in this post that the best way to invest in the markets is through Systematic Investment Plan , without worrying too much about where the markets go in short-term.
Be a wise investor!