Global markets are witnessing a fascinating pivot with CLSA's return to an overweight stance on Indian equities. Simultaneously, Moody's Ratings projects India's growth at 7.2 percent for 2024, a figure that stands out in a world grappling with slower recoveries and geopolitical turbulence.
China is losing steam as its economy grapples with deflationary fears, rising unemployment, and lacklustre property markets. CLSA's recent report dubs this stagnation the tale of a "prevaricating dragon," highlighting Beijing’s cautious and, so far, underwhelming stimulus measures. In stark contrast, India’s strong domestic demand, moderating inflation, and stable macroeconomic landscape paint the picture of a "pouncing tiger" poised to capitalize on global shifts.
According to CLSA, as Donald Trump's second term raises the stakes in US-China trade tensions, India's relative insulation and economic fortitude could position it as a preferred destination for global investments.
But it's not all smooth sailing. The Sensex and Nifty declined over 6 percent in October and have, so far in November, shed nearly 3 percent amid concerns about a slowdown in consumption, earnings moderation, and persistent foreign outflows.
Market veteran Samir Arora of Helios Capital urges caution, reminding investors that CLSA's stance alone should not spark irrational exuberance.
The question now is: How can India channel this renewed interest to secure long-term investments and deepen its economic moat? The tiger is roaring, as per CLSA, but the challenge lies in ensuring it doesn't fade to a whisper.
Also Read | CLSA raises India allocation to 20% overweight on potential foreign inflows, cuts China in U-turn
Eicher Motors (Rs 4,891, +6.6%)
Shares surged after brokerages rolled out positive outlooks.
Bull Case: Key beneficiary of two-wheeler premiumisation. Change in strategy to focus on growth over margins for Royal Enfield expected to improve earnings, Nuvama writes. Overall, with a sharpened focus on core models and new product launches to earnings upside hereon.
Bear Case: Even though the worst of competition is behind for Eicher Motors, its current valuations leave little room for a strong upside, believes Morgan Stanley.
Torrent Power (Rs 1,563, -5%)
Shares slumped after a fall in Q2 net profit.
Bull Case: Swiftly building renewable capacities along with first-mover in tying up large-scale pumped hydro storage capacities and foraying into transmission projects, which as per JM Financial, will result in significant growth ahead.
Bear Case: The stock's over 90% surge in the past year has stretched valuations beyond fundamentals, leaving little scope for upside, believes Elara Capital.
(With inputs from Vaibhavi)
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