CLSA cuts Sensex target to 19000

CLSA becomes the latest brokerage with a more split view on Indian stock markets: few are enthusiastically recommending them, but valuations make them hard to ignore.

CLSA cut its target for the BSE Sensex to 19,000 from 20,000, citing risks such as the widening current account and fiscal deficits, as well as the uncertainty over foreign taxation.

However, CLSA said the Sensex was trading at a P/E forward of 13.5 times for fiscal 2012-13, an 8% discount to the past 10-year average, maintaining its "Overweight" rating on the index.

"While we have turned less bullish on the market due to adverse macro developments over the past few weeks," CLSA said, before adding: "we still expect 10-12% market returns over the next one year, helped by valuations."

CLSA thus joins the club of brokerages that are seeing attractive valuations in India, though with varying degrees of lukewarm-ish endorsements.

Goldman Sachs, for example, upgraded Indian stocks to "marketweight" from "underweight" last month, citing "relatively attractive" stock valuations.