Mumbai: Nifty could end 2022 at 17,000 if there are no further geopolitical escalation issues, Bank of America (BofA) Securities said. This target implies a limited profit for the Nifty, which ended Wednesday at 16,975.35.

Worsening the conflict between Russia and Ukraine and continued sanctions against Russia could bring the Nifty to 14,000 by the end of the year, with a full defensive skew, it said.

Global markets have been rocked in recent weeks by the Russian invasion of Ukraine and the resulting rise in commodity prices. Higher crude oil prices are important for India, as the country imports 85% of its oil needs.

BofA Securities said it is leaning towards the scenario where Nifty closes the year at 17,000, aided by macro buffers.

The financial services firm said the index target implies a 2% increase – which is moderate – but sector rotation could lead to larger returns.

Nifty could close 2022 at 17,000 if tensions ease: BofA Securities“We believe the presence of buffers will prevent a major macro deterioration,” Bank of America Securities said. The company added that the outflow of foreign investors could stop or possibly reverse and that focus could return to India’s growth prospects. BofA Securities said it is bullish on financials and manufacturing, the sectors where foreign investors have reduced their “overweight” positions the most since October.

The Bank Nifty Index is down 9.6% since October 19, 2021, when benchmark indices last hit record highs. The Nifty has fallen 7.8% since that date.

It has lowered consumer staples to underweight and changed its stance on healthcare and autos to overweight.

In a scenario where geopolitical events deteriorate and crude oil costs an average of $130 a barrel by 2022, India’s gross domestic product growth could drop to 7.5%.

Next, it would be bullish or overweight in IT, utilities, healthcare and telecom along with energy/metals, while it would be underweight or bearish in financials, industrials and discretionary stocks.

This post Nifty: Nifty could close 2022 at 17,000 if tensions ease: BofA Securities

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