Ajay Kapur of Bank of America Merrill Lynch remains underweight on India, a view he has had since December 2015 although he acknowledges the recent drop in Risk-Love there.
Neelkanth Mishra of Credit Suisse says MSCI India's P/E premium to MSCI World is now negative 1 percent and it has only been lower 6 percent of the time in the last decade. The premium to MSCI Emerging Market P/E is also down and it has been lower only 18 percent of the time in the last decade.
Rather than indicate an inflection, he believes a lower P/E implies that the market anticipates EPS cuts.
He says Credit Suisse's bottom-up estimates for Nifty EPS are 2/4 percent below consensus for FY17/FY18, with estimates below consensus for nearly every sector, and particularly so for energy, pharmaceuticals and PSU banks.
Further, Mishra believes even some below-consensus estimates by Credit Suisse analysts may have downside.
On the whole, he believes the narrower indices like Nifty/BSE 100 may not do that badly, but some sectors like discretionary, cement, NBFCs may underperform.
Meanwhile, in emerging markets, while the panic of early November is behind, animal spirits remain subdued, Ajay Kapur of Bank of America Merrill Lynch says.
According to him, the divergence between developed markets and emerging markets is exploitable.
Kapur feels EMs/Asia equities should be bought as fundamentals remain strong, currencies are mostly undervalued, earnings are being revised upwards and external accounts are in surplus.
He says investors have liked India for over a year now, regardless of its poor relative performance. He remains underweight on India, a view he has had since December 2015 although he acknowledges the recent drop in Risk-Love there.