Manishi Raychaudhuri, Asia Pacific Equity Strategist at BNP Paribas, said Indian valuations remain at a premium as compared to its Asian peers.
BNP Paribas is overweight on India, and envisages BSE's Sensex to touch 44,500 level by the end of December 2020.
Manishi Raychaudhuri, Asia Pacific Equity Strategist at BNP Paribas, feels that 2020 will be better than 2019.
Speaking at an event held in Mumbai, he said: "Despite challenges such as slower economic growth, lack of private consumption and liquidity concerns continue to remain, most investment advisors remain bullish on India. India, despite its sharp economic slowdown, offers high quality compounders and a few attractively valued candidates poised for a potential recovery. The year 2019 (or FY2020) was a one-horse affair for Indian earnings. Barring the contribution from financials, EPS growth for MSCI India would have been in the range of minus 7 percent to minus 10 percent. The year 2020 promises to be similar, though slightly less so," he said.
Compounders mean quality stocks giving consistent returns over a long period of time.
He said Indian valuations remain at a premium as compared to other Asian peers.
Speaking about theme concentration in 2020, Raychaudhuri said that within India, they will continue to focus on quality and select attractively valued stocks among consumer and consumer proxy sectors.
He pointed out that domestic flows will continue to India because of lack of alternative investment opportunities and the regular ‘sweeping’ of retail savings in to equities in markets like India and Malaysia.
Within BNP Paribas Asian Model Portfolio, global financial player was overweight on banking and financial stocks with exposure to HDFC Bank, Kotak Mahindra Bank, Axis Bank, HDFC Ltd and HDFC Life Insurance.
On the RBI interest rates, Raychaudhuri said: "We believe RBI has more room to cut rates, but the wiggle room for the government to engage in fiscal stimulus through increased spending on further tax cuts seems limited on account of already stretched fiscal position."
According to Abhiram Eleswarapu, Head of India Equity Research, BNP Paribas, the weakness of the India economy will continue, at least in the near term led by income uncertainty and slow rate cut transmission.
"It will be a difficult choice for the government between boosting growth and maintaining fiscal discipline," Eleswarapu said, adding that the government will do well to restrict the FY20 deficit to 3.7 percent as against its target of 3.3 percent.
He also said the Union Budget will give a clear indication on how the government is planning to tackle the slowdown— by withholding the expenditure or by taking a hit on fiscal deficit.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.