Retain cautious stance with December Sensex target at 30000: BofAML's Sanjay Mookim

Sanjay Mookim of Bank of America Merrill Lynch said MSCI India trades at a large P/E premium to Emerging Market (EM) even though earnings growth is not materially higher. This is driven by consumer facing stocks and only partly explained by higher Indian return on equities.

There is also significant 'faith' foreign investors seem to have in the Indian consumption story, he feels.

He said Indian stocks have a 'visibility premium' rather than a 'growth premium'.

"We measure this as the number of years of high return on equity built into consumer stock prices and with the recent rally that is also now at cyclical highs," he said.