With the year 2019 coming to an end, key brokerages are out with their macro and equity outlook for the year 2020.

Citigroup in their outlook state that slow recovery and high valuations will mean only limited upside for equities in 2020. The quantitative easing (QE) from global central banks and any trade war resolution would mean that there could be some upside for emerging market equities but the upside would be quite limited according to Citigroup report. They have set December 2020 Nifty target at 12,700, which is just a 5 percent upside from current levels.

The report says, Asian markets will have very moderate returns in 2020 but within that India will be a key overweight market for the group.

According to the report, the key theme to watch out and play for in 2020 would be earnings recovery across the board be it largecaps, midcaps or smallcaps.

Sector specific, they are overweight on financials, healthcare and industrials. Whereas they are underweight on consumer staples, materials ex-cement and autos.

With regards to the macros, the group expects a very moderate cyclical recovery in gross domestic product (GDP) to 5.9 percent in FY21. They expect the inflation to average below the Reserve Bank of India’s (RBI) target of 4 percent despite the recent food scare.

As per the report, the fiscal deficit to GDP can slip to 3.6 percent in FY20 and in terms monetary policy, expectation is of two rate cuts of 25 basis points each in April and June next year.

On the currency front, they expect rupee to trade in a range between 70 and 72 to the dollar.