Technicals showing signs of bottoming; valuations of largecaps close to 'fair' value, SMIDs still expensive: Goldman Sachs

Indian equities after a significant correction are getting analysed by global and domestic brokerages alike. And in its recent analysis, global brokerage Goldman Sachs remains marketweight on India. The brokerage held that 12-month target has been slashed to 25,500 from 27,000- implying potential gains of 13 per cent from the previous close.

Also, the 3-month and 6-month bluechip Nifty's target has been placed at 23,000 and 24,000, respectively.

Furthermore, the brokerage added that current technicals suggest that markets are showing signs of bottom out.

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EPS estimates downgrade cycle being moderated

The brokerage on the macros asserted that it expects a gradual recovery in domestic growth. Also, the pace of EPS or earning per share downgrade cycle has moderated. This means analysts while they are reducing their profit estimates for companies, nevertheless, they are doing it a comparatively slower pace.

Comparison of largecap vs small and midcaps valuations

Analysts added that while valuations of largecaps are nearing their determined 'fair' value, small and midcaps are still overly priced.

What to buy given the current dynamics?

Analysts at the brokerage suggest to stay with quality and look for the oversold screener and engage in bottomfishing.