Mahesh Nandurkar of CLSA says India continues to be an overweight market for international investors but to a lesser extent compared to 12 months ago.
"An improving reforms momentum, expectations of a pick-up in earnings growth from H2FY17 and falling inflation are pulling investors back into India. This should help to reverse its underperformance," he reasons.
Top ideas include HDFC, Maruti Suzuki, Power Grid, ACC, Ambuja Cements, IOC and ITC, he says, adding the brokerage house still finds Reliance Industries interesting and remains overweight on the stock. (Disclosure: Reliance Industries owns Network18 that publishes Moneycontrol.com)
CLSA witnessed reducing investor interest in Axis Bank and Tata Motors within large caps, Nandurkar says.
Meanwhile, Bharat Iyer of JP Morgan says one consistent aspect of Indian equity investors' expectations over last five years has been - the expectations of a second half revival.
He further says delivered growth has consistently lagged expectations led by a variety of factors. What's different currently is the known confluence of positives: a good monsoon, Pay Commission boost, rate and liquidity stance, stable global commodity prices and signs of continued public investment momentum.
The new RBI governor and the Monetary Policy Committee mechanism on the rate outlook would be important in this context, he feels.
Iyer says the next policy meeting is on October 4 and the brokerage house expects a 25-50 bps rate cut over H2FY17. The base case is of a 25 bps cut in the December policy, he says.
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