The sentiment towards India is extremely positive, leading to more foreign flows, which are likely to continue for some more time.
Sharing his outlook for the Indian equity markets, the emerging, and the global markets, Pratik Gupta, head of equities at Deutsche Bank India feels that India's stable government gives it an edge over the others.
"To put things in perspective the choices global investors have amongst other emerging markets are China, Brazil, Mexico, Russia, and the eastern Europe zone. Among these there is political problems or tariff issues with Mexico and China or the US trade war and its slowing economy. In Russia and Brazil, you have commodities coming off. But India stands out as the place with clear political stability for the next five years," Gupta said.
The Indian economy is slowing down but at the same time, there is a lot of potential for a rate cut. Interest rates can come down, liquidity can improve, the broader market has underperformed the headline Nifty index, and to that extent, there is a lot of interest in India, he stated.
"We see a lot of money sloshing around. With US bond yields beginning to come off and expectations of a rate cut, there could be more allocation or at least reallocation within the emerging markets towards India," Gupta said.
The sentiment towards India is extremely positive, leading to more foreign flows, which are likely to continue for some more time, he added.
"FY20 should be a little better than last year, but the market is still expensive on a headline basis. However, most global investors are looking beyond the next one to three quarters and are looking more at the structural story with a two-three year view," Gupta stated, with regards to earnings.
When asked about fair value for the market, he said, "As far as the index is concerned, we do not see too much upside. The year-end target was 12,500 for Nifty based on assumption that NDA government would come and now that it has, it does not leave too much upside at index level but that is one from a short-term perspective of six months or so."
"However, the target does not take into account the potential overshoots that we may see in the near-term given the reallocations that are going on within the emerging markets universe," he added.
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