CLSA and JP Morgan have come up with their note on India’s strategy at a time when Indian markets are at record high. Amidst sluggish global cues, Indian markets seem to outperform the rest. Know what these foreign brokerage firms are suggesting to bet on.
CLSA highlights that India has seen strong inflows of US$1bn in Sep to date; this is after FIIs infused US$0.3bn in the month of August.
All emerging markets except South Korea & South Africa had equity inflows in the month of August. CLSA notes that FIIs have moved to IT/NBFC/banks from materials/staples/utilities.
They have raised their weight in banks and NBFCs while their underweight in the IT sector has now fallen to a multi-year low. On the other hand, FIIs have cut active weight in materials, staples, utilities, communication services, and industrials.
The light positioning of FIIs versus history remains a possible buying opportunity in banks and materials. Strong new offerings (NFOs) of US$2.2bn ensured strong US$2.9 bn inflows.
Another brokerage firm JP Morgan notes that this kind of market can still favor rate-sensitive sectors like banks, autos, and real estate and it continues to like them.
As per them, the liquidity environment can drive and see them as best suited to deliver topline improvements. Indian markets have defied slowing earnings but going forward they fell it’s is unlikely that earnings will surprise over elevated expectations.
JP Morgan says that it is difficult to anticipate the market momentum for now but do highlight Indian markets have outperformed emerging markets meaningfully.
