India one of the best performing markets globally this month

Valuation re-rating could take markets 15-20% higher, says Macquarie

The Indian markets have emerged as one of the best performing markets in the world this month.  

The BSE’s Sensex, an index whose movements are held to be representative of how the market is doing, is up 3.34% since the year began, according to Bloomberg data. It is up 8% over the past month and has beaten even the United States in terms of dollar returns, according to a Macquarie Capital Securities India report dated 14 March.

“The Indian market is taking a bit of a breather here after a strong rally and also discounting the weak data emerging out of China. IIP numbers for Jan 2014 surprised consensus expectations positively while inflation continues to moderate,” said the report entitled ‘Eye on India’, authored by analysts Rakesh Arora and Arjun Bhattacharya.

The duo suggest a shift to stocks which are more volatile than the market and which consequently rise or fall more than the market does, in other words-increasing the proportion of ‘beta’ in one’s portfolio.

“This is an excellent opportunity to add some beta if you are still underweight or sitting on the sidelines. The shift from IT(information Technology) to Banks has gathered pace, with Infosys adding to negative sentiment” said the report.