India’s recent rally catching up with upmove in other Asian markets: UBS Sec's Sunil Tirumalai

Speaking at an exclusive interview with CNBC-TV18, Tirumalai said, "...When I look at India, in an emerging market context, it is largely in line with the index."

Comparing India's bull run in the stock market in the recent sessions with other Asian markets, Sunil Tirumalai of UBS Securities India said that this rally is catching up with the upmove of other global markets.

Speaking at an exclusive interview with CNBC-TV18, Tirumalai said, "...When I look at India, in an emerging market context, it is largely in line with the index, with some of the other Asian markets, which have been extremely strong this year."

The UBS top executive's comments come on the day the Indian shares extended gains, led by a rise in auto and consumer stocks, tracking their Asian and European peers higher on hopes of a China stimulus package. The Nifty 50 index settled 0.43 percent higher at 19,439.40, while the S&P BSE Sensex rose 0.42 percent to close at 65,617.84 on July 11.

However, Tirumalai also said: "This kind of catching up is on what we lost in the first half of the year. If we look at what the outlook is, where India stands versus other markets, and where the valuations are, I think the upside is kind of limited."

Spotlight On Market Flows | India’s recent rally is catching up with the upmove in other Asian markets, says @UBS' Sunil Tirumalai. He expects emerging markets to see 18-19% growth in 2024 @Reematendulkar @SurabhiUpadhyay @PavitraParekh1

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— CNBC-TV18 (@CNBCTV18News) July 11, 2023

Furthermore, he also expects emerging markets to see 18-19 percent growth in 2024 and for India, somewhere in the range of 14-15 percent.

Highlighting on the margin performance, he said, "We we have the three-year history, and a three-year forecast kind of view and what we notice is that India's top line growth, margins, earnings are all fairly ordinary."

Getting back to the upside move of Indian markets among other emerging markets, Tirumalai also noted that pre-pandemic, India normally had about 20 to 30 percent premium, which is the India premium, which can't be explained by the growth of the companies. That number has gone up to about 70 percent. "So I think this is where I mean, a lot of the narratives have probably already got priced in and we don't see too much of upside. So, we have India as underweight in our EM universe."

Tirumalai also noted that Indian corporates are generally stuck up in the bottom half, from three to four-year history period. "Even if you look at forecasts, you know, 2024, calendar year, there are quite a few other emerging markets where the sell side expectations are much stronger than that for India," he added.

Recently, according to an Invesco Global Sovereign Asset Management Study, India took over China as the most preferred destination for Sovereign Wealth Funds (SWFs) looking to put money in emerging market debt.

“Emerging Markets with solid demographics, political stability, and proactive regulation, particularly India, have emerged as prime investment destinations,” said the Invesco study.