Even though India’s headline equity index Nifty has slumped below the 16,000-mark, global investment bank Credit Suisse finds it expensive and believes rival China will outperform in the remaining calendar year 2022, a report by Economic Times said.
Quoting Suresh Tantia, Senior Investment Strategist, Credit Suisse, ET report said, “the recovery has been very strong in India. The high-frequency indicators are giving positive signals. But the valuations are still expensive. Despite the pullback seen in Nifty from 18,600 levels to sub-16,000, the valuations are not cheap as compared to the rest of Asia."
Tantia added that their view on the Indian market is neutral but not negative but expects other markets to do well, especially China. He also noted that the Chinese stock market is expected to outperform the rest of Asia for the next two quarters as money is expected to rotate from Southeast Asian countries like Thailand and Vietnam, which are relatively expensive, to China.
The ET report further pointed out that Credit Suisse's investment outlook report for the second half of 2022 says that India Inc may see a moderation in earnings revisions going forward. "Nevertheless, conditions for investment growth remain supportive, such as low corporate leverage and healthy banking balance sheets. Foreign ownership is back to 2013 lows, but domestic investors are now more influential and should be able to support equities beyond the near-term volatility," it said.
Although concerned about high inflation and slowing growth, Credit Suisse said investors should take market turbulence in their stride, and it would be a mistake to leave markets at this stage, ET highlighted.
John Woods, Chief Investment Officer Asia Pacific at Credit Suisse, said: “A key component of our equities-overweight has been – and continues to be – China, where the latest moves by the government improve the prospects of a large fiscal support for the economy.”