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HomeMarket NewsNifty near peak for now, returns to stay limited: BofA’s Amish Shah
BofA Securities remains cautious on momentum-driven sectors such as railways, defence, and public sector units in power and utilities.
Amish Shah, Head of India Research at BofA Securities, expects the Nifty to move sideways for now. For short-term investors, he suggests taking some profits. For those with a longer horizon of two to three years, he expects returns to be limited.
Shah said, “Valuations are full, clearly, we can't fault the long-term drivers or the growth in India. Macro story continues to stay well, but 21 times at Nifty, it's almost at plus one standard deviation.”
He said market movements won’t be in a straight line and there will be ups and downs based on news flow.
BofA Securities has used this volatility effectively. For example, when the market was around 26,500 last August—above its fair value of 25,000—they turned cautious and expected a drop of around 17%.
When the market fell to 22,000 in March, they turned positive again while keeping the same target of 25,000, which led to a 15% rally. Now that the market has reached this target, they advise investors to take profits.
Shah also noted that the market had already factored in the benefits of a possible trade deal for India and the China Plus One trend.
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Sectors like autos, pharma, and IT may see some short-term gains due to easing concerns about a US slowdown. However, since India was not pricing in the impact of potential Trump tariffs, a major rally based on that scenario is unlikely.
Shah believes the economy requires a stimulus, but there is limited scope for fiscal support at the moment. As a result, he sees monetary policy playing a larger role. He expects the Reserve Bank of India or the government to use available monetary tools, and because of this continued monetary support, he remains positive on rate-sensitive and domestic cyclical sectors.
According to Shah, this includes financials, autos, REITs, real estate, and some internet-based companies. Within the auto segment, he is more optimistic about passenger vehicles, followed by two-wheelers.
However, he is less positive on commercial vehicles due to an expected slowdown in infrastructure growth.
BofA Securities remains cautious on momentum-driven sectors such as railways, defence, and public sector units in power and utilities.
