CLSA upgrades India: India is indeed in a sweet spot, as a host of global brokerages are turning bullish. After Morgan Stanley and Nomura, CLSA has also upgraded India to overweight and increased its India portfolio allocation to 20 per cent above the MSCI benchmark versus 40 per cent ‘underweight’ earlier.
The brokerage added that, on an annual basis, there is a possibility of 20–35 per cent growth momentum in the Nifty50. The Indian market is currently functioning at a fair value, and a 22 per cent upside is possible.
CLSA further said that, as compared to last year, financials, utilities, and industrials are all trading at cheaper valuations.
CLSA said that strong credit, better energy pricing, strong GDP, and earnings per share (EPS) growth have boosted confidence. The brokerage added that India’s inclusion in the global fixed-income benchmark will also lend significant support. It further said that among emerging markets, India’s +6 per cent GDP growth outlook is the best.
The brokerage is positive on HDFC Bank, ICICI Bank, SBI, Bajaj Finance, Axis Bank, Reliance, ONGC, L&T, Tata Motors, and Bharti Airtel.
Last month, Nomura upgraded India’s rating to ‘Overweight’ from ‘Neutral’ earlier. The global brokerage said that India’s structural growth story is now well-known as the major beneficiary of the China+1 theme, possessing a large liquid equity market. Before Nomura, Morgan Stanley raised India’s rating to overweight in August, saying relative valuations are ‘less extreme’ than in October (2022), and the nation’s reform and macro-stability agenda supports a strong capex and profit outlook. READ MORE
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