FIIs positive on India, but advocate risk recognition

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FIIs positive on India, but advocate risk recognition

After correction, Morgan Stanley, Bear Stearns and CLSA have come out with their India strategy report. MS is keeping a close watch on earnings and said India growth story may not be over as yet. BS believes India still looks expensive, while CLSA is quite positive on the market and they feel that India is relatively insulated from US slowdown.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Bharat Heavy Electricals | ITC | Mahindra and Mahindra | Maruti Suzuki India | Mahindra Satyam | Tata Power Company | Tata Steel (CCPS) |

By Archi Damania , CNBC-TV18

After the correction, Morgan Stanley , Bear Stearns and CLSA have come out with their India strategy report.

Morgan Stanley says that they are keeping a close watch on earnings and the India growth story may not be over immediately, but have to identify and recognize the risks there are, going forward. Earnings quality has also been mixed. Morgan Stanley's consensus estimate for BSE Sensex growth is 18% for FY09 and 28% for FY10.

Morgan Stanley has said that the pace for upward revision would slightly slowdown to maybe, low to mid teens this time around and the biggest negative surprise could come from consumer discretionary, industrial and utilities. However, they are also saying that materials, telecom and energy could benefit from upward revisions, going forward.

Bear Stearns is of the view that even after the fall on January 22, India still looks expensive. Their rating for India is market weight, but with a positive bias. They are of the view that India is more of a domestic market than most of the Asian peers and there are also chances of a rate cut there, which is positive.

They have on their stock radar, not a buy or sell, the following stocks -  M&M , ITC , Maruti and ICICI Bank .

CLSA is quite positive on the market and feels that India is relatively insulated from US slowdown.

It says that gems, jewellery, textile and IT are most vulnerable to US slowdown, but India prefers domestic consumption and investment ideas.

CLSA's top buys include Bharti , BHEL , ICICI Bank , ITC and Tata Power . But they also like stocks with high cash levels and which will benefit from lower interest environment that is expected to follow. Considering these two factors, they like Maruti, Tata Motors, Tata Steel and Satyam .