Credit Suisse sees no crisis in market; says upside on way
Mumbai: Brokerage Credit Suisse Tuesday said it does not see any deeper correction in the market and expects some upside to the broader market over the next 12 months, though the near-term will be range-bound.
"We expect some upside to the broader market over the next 12 months, but it may be range-bound near-term and unlikely to face a crisis," Credit Suisse said in a report.
"Market consensus has now veered towards extreme defensiveness and phrases like "currency crisis" and "meltdown" are being bandied about. We do not expect any meaningful recovery in investment or middle-income consumption anytime soon. However, we believe a crisis is unlikely: bargain-hunting selectively makes sense," Credit Suisse said.
In another report earlier in the day, it had said it expects the Sensex crossing the 20,000-mount by December. The brokerage firm said the market sentiment of late has been the worst in recent memory.
Six months back, consensus expected the economy to be bottoming out, and earnings upgrades to start, it said.
"We believed any near-term rebound in investments or middle-income consumption is unlikely, and that earnings has meaningful downside. But a surprisingly common view now is that the currency will drive a crisis and that the economy is headed for a "meltdown"," Credit Suisse said.
"We believe a crisis is unlikely: this is an important difference of opinion, for it allows investors to select beaten-down good quality stocks," it said.
The local market has underperformed global markets in each of the last five months in both USD and local currency terms. This underperformance had continued in April as well, and the Indian market remains in bottom quartile.
Credit Suisse pointed out that the current market correction has been more broad-based compared to the two previous corrections from near-term peaks, with out-performance restricted to a fewer stocks.
In some of the beaten-down sectors some good quality stocks are now showing value, it said adding the best performing sectors continue to be defensives such as staples, healthcare and IT. Accordingly, it is bullish on NTPC, Cairn India and Ambuja.