Overweight on India! Goldman Sachs sees domestic market as major source of creating multibaggers

Given that the domestic macroeconomic environment remains stable amid peak inflation and manageable current account deficit, Goldman Sachs is bullish on India’s medium-term growth prospects and recommends foreign investors build exposure in this emerging market.

“We think Indian equities could be a major source of potential alpha generation in the years to come for investors, given the market’s strong historical track record and the runway for strong growth ahead,” the global investment bank said.

It continues to favour domestic cyclicals over global cyclicals in India and remains overweight on banks and investment cyclicals such as industrials and cement.

Additionally, the bank expects themes like quality at a reasonable price, capex recovery, and make in India also play out in the coming years.

The bank has identified stocks under two categories that investors can consider for increasing exposure in the medium term. These are “largecap compounders” and “midcap multibaggers.”

The bank’s largecap compounders basket has outperformed the Nifty index by 10 percentage points over the past year.

HDFC Bank, ICICI Bank, SBI, Bharti Airtel, Bajaj Finance, L&T, Maruti Suzuki, Titan Co, Adani Ports & SEZ, Mahindra & Mahindra, UltraTech Cement, Varun Beverages, Siemens, Bharat Electronics, Zomato, Apollo Hospitals, Samvardhana Motherson, PI Industries, Page Industries, and Paytm parent One 97 Communications are part of Goldman Sachs’ largecap compounders basket.

Meanwhile, Goldman Sachs’ midcap multibaggers basket has outperformed the Nifty 200 index by 18 percentage points in the last year.

Container Corp of India, Aditya Birla Capital, Nykaa, Gujarat Fluorochemicals, Vedant Fashions, Uno Media, Syngene International, Devyani International, Sundram Fasteners, Kansai Nerolac Paints, Bata India, Kajaria Ceramics, Bharat Dynamics, Rajesh Exports, Westlife Foodworld, and VIP Industries are among the stocks in the midcap
multibaggers basket of Goldman Sachs.

India’s aggregate equity market capitalization has surged 12-fold since 2003, and the average market cap to GDP ratio has increased to 87% in the last decade from 76% in the preceding decade, suggesting ongoing capital market development, said the global investment bank.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)