The year 2019 was a volatile year for the markets with the benchmark indices scaling fresh lifetime highs even as the economic growth hit multi-year lows and inflation rose. Trade war concerns, demand slowdown, rupee volatility, rate cuts by the Reserve Bank of India guided the indices in 2019.

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NSE

On a year-to-date basis, the Sensex rose 15 percent while the Nifty50 was up nearly 13 percent. However, broader markets continue to underperform the indices with the S&P BSE Mid-cap index down 3 percent and S&P BSE Small-Cap index falling 8 percent for the year.

Going ahead, government measures announced recently like corporate tax cuts help the indices. Other macroeconomic factors like growth and inflation will also steer the markets. Globally, US-China trade war crude oil prices and the dollar will be other key monitorable in 2020.

Here's what brokerages expect from Indian markets in 2020

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Citi

The brokerage expects the macro recovery to be protracted and see the earnings expectations as high. Valuations remain expensive in the historical context, hence upsides will be limited, it added. It's December 2020 Nifty target is at 12,700 - 5 percent upside from the current level.

The brokerage is 'overweight' on financials, healthcare, and industrials, and 'underweight' on consumer staples and auto space.

Top large-cap picks of Citi include HCL Tech, HDFC Bank, ICICI Bank, IndusInd Bank, L&T, Maruti, Petronet LNG, SBI Life, and UltraTech Cement. Among midcaps, it prefers, ACC, Apollo Hospitals, Biocon, Indraprastha Gas, JSW Energy, JustDial, L&T Infotech, L&T Finance Holdings, Phoenix Mills, Polycab India, and SRF.

UBS

As per the brokerage, it was constructive on the Indian markets for the last 3 months, however, after the recent rally the risk-reward has become less attractive, it said. Its base-case target for Nifty by June 2020 is 12,300, based on 18x forward PE multiple, with upside and downside scenarios at 13,300 and 10,300, respectively. The investment bank added that the recent announcements like corporate tax cuts are a sentiment booster and could provide support to the indices.

For India, the brokerage is 'overweight' on financials, property, oil & gas, power utilities, life insurance, and telecom. It is 'neutral' on consumer staples, consumer discretionary, metals, pharma, cement, and industrials. Finally, it is 'underweight' on auto, IT services, and small and midcaps space.

Morgan Stanley

According to the brokerage, India is likely to outperform emerging markets in 2020 on the back of improving growth and reasonable valuations. That said, policy action needs to continue, it added. It continues to back domestic cyclical mid-cap value stocks from a portfolio perspective and December 2020, BSE Sensex target stands at 45,000.

The brokerage continues to back growth at a reasonable price and believes the way to construct portfolios is to buy stocks of companies with the highest delta in return on capital. It expects market performance to broaden and hence like mid-caps where the forward growth is not reflecting share price performance.

Morgan Stanley's focus list for 2020 includes Bajaj Auto, M&M, Maruti Suzuki, Motherson Sumi, Indian Hotels, Jubilant FoodWorks, ITC, United Spirits, RIL, DLF, HDFC, HDFC Bank, ICICI Bank, M&M Financial, MCX, Shriram Transport, Ashok Leyland, InterGlobe Aviation, L&T, and Gujarat Gas.

Among sectors, it has increased weightage in consumer discretionary, industrials, and financials and reduced weight on technology, healthcare, and materials.

READ MORE: India 2020 outlook: Credit Suisse vs Morgan Stanley

Credit Suisse

The brokerage expects narrow market performance to continue for now, as economic uncertainty continues to push funds into the 'safe' stocks. With the 2020 outlook, Credit Suisse has shifted to a more concentrated model portfolio in which it has selected the 30 ideas that it believes hold the best upsides.

The brokerage stays 'overweight' on financials like SBI, ICICI Bank, ICICI Life. In telecom, it likes Bharti Airtel, in utilities PowerGrid, and Tata Steel among metal stocks. It is also minor 'overweight' on pharma (Dr. Reddy's, Lupin) and IT (Tech Mahindra), and 'underweight' on discretionary, cement, and industrials.

Jefferies

The brokerage remains cautious on Indian equities given the run-up seen thus far in CY19. That apart, the valuation of the Indian markets is also a concern for them amid slowing growth.

“We remain defensive, also noting that India's extended valuations amid buoyant flows also appear to price in tailwinds from announced and anticipated policy interventions like income tax cuts. Financials may continue to do well, but discretionary and staples may not. We remain underweight on both in our model portfolio, therefore, still preferring industrials and technology instead," it said.

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