Equities to retain P/E premium over EM peers, says Credit Suisse

The medium-term outlook for equities remains positive but some caution is warranted in the short term, the brokerage said

India’s investment appeal among global investors has improved materially, given improved corporate balance sheets, focus on reforms, record foreign exchange reserves, and a good momentum on tax collections, says a report by Credit Suisse.

This improved outlook is clearly visible in India’s record-high price-to-earnings (P/E) premium over other emerging markets: The MSCI India trades at a 12-month forward P/E premium of 83 per cent versus the MSCI Emerging Markets Index, compared to the 10-year average premium of 42 per cent. Indian equities outperformed major global equities with the Nifty Index gaining 5.2 per cent compared with the MSCI World’s returns of