India receives an upgraded outlook from HSBC, the global “financial services firm”, whereby India gains more weight for HSBC considers Indian market as “relatively defensive” amid the growing “uncertain investment” in the global markets.
The analysts from HSBC stated:
“Global asset allocators face a period of uncertainty. They might be more inclined to increase the allocation towards defensive assets in the period of economic and political uncertainty in major parts of the developed world. A variety of global themes could play a role in this volatile environment, with markets moving from one issue to another as events unfold. The results show that India is not immune to these factors, but we believe it is one of the most defensive markets, i.e. the least driven by global factors”.
HSBC thinks that India has to offer “one of the most convincing growth stories”. The acceleration of GDP growth has “narrowed” the budget deficit “significantly”; in the meanwhile the “frequency data points are picking up”, while the recent earnings points indicate an “improvement in demand”.
Nevertheless, the “high consensus earnings forecast” of India has been considered one of the major risks in “Indian equities” by HSBC. In fact, in the beginning of this year, the “consensus earning forecast for 2016” showed a “18.5 per cent”. According HSBC:
“However, after the recent annual earnings season, the expectations have come down. The earnings growth expectations of 14 per cent for 2016 are more realistic and closer to our expectations of 12 per cent, reducing one of the overhangs on India equities, in our view. As a result of this, the valuation multiple, which was inflated, looks more realistic now, in our view. MSCI India is trading at a 12-month forward PE of 17.2 times, which is 15 per cent above the last five-year average. We believe that Indian equities deserve to trade at higher multiples than the historical average due to several reasons — improving macro position, relatively defensive characteristics in times of increasing risks to global growth, and decline in cost of equity”.
References:
http://www.deccanchronicle.com/
The analysts from HSBC stated:
“Global asset allocators face a period of uncertainty. They might be more inclined to increase the allocation towards defensive assets in the period of economic and political uncertainty in major parts of the developed world. A variety of global themes could play a role in this volatile environment, with markets moving from one issue to another as events unfold. The results show that India is not immune to these factors, but we believe it is one of the most defensive markets, i.e. the least driven by global factors”.
HSBC thinks that India has to offer “one of the most convincing growth stories”. The acceleration of GDP growth has “narrowed” the budget deficit “significantly”; in the meanwhile the “frequency data points are picking up”, while the recent earnings points indicate an “improvement in demand”.
Nevertheless, the “high consensus earnings forecast” of India has been considered one of the major risks in “Indian equities” by HSBC. In fact, in the beginning of this year, the “consensus earning forecast for 2016” showed a “18.5 per cent”. According HSBC:
“However, after the recent annual earnings season, the expectations have come down. The earnings growth expectations of 14 per cent for 2016 are more realistic and closer to our expectations of 12 per cent, reducing one of the overhangs on India equities, in our view. As a result of this, the valuation multiple, which was inflated, looks more realistic now, in our view. MSCI India is trading at a 12-month forward PE of 17.2 times, which is 15 per cent above the last five-year average. We believe that Indian equities deserve to trade at higher multiples than the historical average due to several reasons — improving macro position, relatively defensive characteristics in times of increasing risks to global growth, and decline in cost of equity”.
References:
http://www.deccanchronicle.com/
