According to Deutsche Bank's India strategy for 2015 the bull market in India is likely to continue. They have a Sensex target of 33000 for December 2015 even after the market has seen an upside of 30 percent last year, which implies a potential upside of 23 percent from current levels.
The report says in 2015 the markets will be driven by domestic retail money and not foreign institutional investor (FII) money, which is a big shift that they are expecting.
Last year there was USD 4 billion of DII money in the market, which Deutsche believes could double in 2015.
Sector Call
Sector specific, Deutsche Bank is overweight on financials, industrials and materials. These sectors according to them will drive the markets in 2015.
Meanwhile, the bank is surprisingly underweight on IT services apart from consumer staples because of valuation concerns. IT services they believe could underperform in 2015.
Stock Call
Stock specific it is a mixed blend of autos, financials and some bit of metal stocks.
They are very bullish on the two large banks Axis Bank and ICICI Bank from the private space and from the PSU space they are upbeat on State Bank of India.
Within autos they like Maruti and Mahindra and Mahindra . They have also picked up REC, SAIL and Tata Steel.
In terms of midcap stocks they have some interesting picks; they like Bharat Forge even after sharp run up that we saw last year. CESC is another one of their picks. They also like Cummins India , Gujarat Pipavav and HPCL in the oil and gas space. HPCL is the only stock that they like in the entire oil and gas space and something like JSW Energy .
So, while the bank believes that there will be lot of volatility in the first half of 2015, the key message to the investors is hold on to their investments because even this year could be as good as last year. They have implieda 23 percent upside from current levels.
As far as Tata Steel is concerned, Deutsche Bank could be the only brokerage firm that is bullish on the stock for a long time now. In fact they have been the highest in terms of target as well. Their target it is close to around Rs 670 odd, which implies a 74 percent upside from current levels.
So, while they are not very bullish on the entire commodities cycle but within that they believe Tata Steel is well poised and they can benefit heavily both from the Corus point of view and from the domestic upside as well. It's a very selective pick in the metals pack.
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