Goldman backs bear camp, underweight on India
Goldman Sachs is underweight on India with a 12-month target of 5700 for the Nifty. At 14 times one-year forward earnings Timothy Moe says India is expensive, considering the deteriorating macro-economic environment.
September 18, 2013 / 12:59 IST
The recent pull back in Indian equities has not impressed most Asian strategists tracking the market. The latest to voice his skepticism is Timothy Moe of Goldman Sachs.
This is what he has to say in morning note to clients today.“Domestic growth outlook remains challenged, which coupled with tighter financial conditions, points to lower earnings/multiples. We expect earnings to grow 8% in CY14E, 5 percentage points below consensus estimate of 13%.”Goldman Sachs is underweight on India with a 12-month target of 5700 for the Nifty. At 14 times one-year forward earnings Moe says India is expensive, considering the deteriorating macro-economic environment.He concedes that the market could rally if the US Federal Reserve maintains a status quo on bond purchases (QE) or reduces it by a quantum lower than what market is expecting.“But we would expect such a rally to fade and for markets to move lower in-line with the deteriorating fundamentals,” he says.Also Read: Why US recovery may send treasurys, dollar crashingAnd while most emerging market/Asia active fund managers are still overweight on India,Moe cautions that that could well turn out to be a double-edged sword he cautions.“Major EM/Asia active managers are still overweight India by roughly 300-400 basis points and any meaningful retail redemptions or decrease in allocations could put pressure on equities,” he says.(Posted by Nimesh Shah) Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
