Foreign brokers positive on India ahead of Lok Sabha poll results

Credit Suisse says India along with MSCI China, Korea biggest overweights

Two leading foreign brokers painted a positive outlook for India amid heightened prospects of sharp gains in the run-up to the general elections early next year.

Credit Suisse said India along with MSCI China and Korea were its biggest overweights, while CLSA Asia-Pacific Markets said it is adding a percent to India’s rating in Asia Pacific ex-Japan Relative Return portfolio.

 

The upgrades come on the heels of Goldman Sachs upgrading India earlier this month on hopes of Narendra Modi-led BJP forming the next government. The Goldman report drew sharp criticism from the Union Commerce & Industry minister Anand Sharma.
 

CLSA said the forthcoming polls are potential catalysts to increase India’s weightage, according to Bloomberg. Before the general elections in April 2014, Chhattisgarh, Rajasthan, Madhya Pradesh, and Delhi are set to go to the polls on December 8.

 

Analysts said markets will closely watch the outcome of the four state elections to gauge the response to Narendra Modi’s elevation as the prime minister candidate for BJP. 
 

“We believe Korea (doubling in developed market GDP growth), MSCI China (plenum reforms) and India (elections) could potentially be the leaders of the next cycle,” said Credit Suisse’s equity strategists led by Sakthi Siva in a report.

 

The elections could act as a catalyst to boost nominal Gross Domestic Product (GDP) growth and Return on Equity (ROE), the Credit Suisse strategists said.

Goldman Sachs raises India to marketweight from underweight

Nomura raises March-end Sensex target to 22,000

Citi remains cautious on India with December Sensex target at 18,900

Credit Suisse says India among top three overweights in the region

CLSA to add 1 percent to small India overweight in Asia Pacific ex-Japan Relative Return portfolio

Goldman Sachs, in the recent note headlined “Modi-fying our view: raise India to Marketweight”, had said a BJP-led government may be beneficial for the investment demand pick-up. Reacting to the report, Sharma had accused Goldman of political interference. 

 

Soon after Goldman’s report, CLSA’s chief equity strategist Christopher Wood, in his earlier report, had reiterated that stock market could see a ‘dramatic rally’ if the ‘BJP candidate’ can achieve a visible majority, a prospect that was thought to be inconceivable a year ago.

 

Foreign institutional investors have net bought shares worth $17.2 billion so far this year, the highest after Japan among the leading Asian markets. Benchmark stock indices have gained close to 5 percent so far this year. 

 

Credit Suisse said politics and developments around the US Fed’s monetary stimulus taper would drive the market in the first half of 2014.

 

“We believe both will have limited impact on fundamentals, but market sentiments will still get affected,” said Credit Suisse strategists.