Not time to be defensive in India: Citi

Citigroup says "don't be defensive" when it comes to Indian stocks. Investment bank recommends cyclicals over defensives as the latter are trading at premiums of 90 percent or more to the former.

The premiums, now close to five-year peaks, should moderate, Citigroup says in a report dated Tuesday.

Though Citi warns earnings growth are "slackening", bank says it still expects 11 percent growth in fiscal 2012-13 and 14 percent growth in 2013-14.

Citi adds GDP drop is "likely behind": "Earnings risks should be a lot less than the markets' bearishness on GDP growth."

Citi is "overweight" on financials, capital goods and auto stocks, while being "underweight" on consumer staples, energy and commodities.

It has hedged risks of further depreciation in the Indian rupee by being "overweight" on pharmas and "neutral" on IT services in its model portfolio.