Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Indian stocks may outperform Asian peers in long term - Jefferies

Published 03/24/2023, 04:38 AM
Updated 03/24/2023, 04:40 AM
© Reuters. FILE PHOTO: A general view of the Bombay Stock Exchange (BSE), after Sensex surpassed the 50,000 level for the first time, in Mumbai, India, January 21, 2021. REUTERS/Francis Mascarenhas

© Reuters. FILE PHOTO: A general view of the Bombay Stock Exchange (BSE), after Sensex surpassed the 50,000 level for the first time, in Mumbai, India, January 21, 2021. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) - The Indian stock market may outperform its Asian and emerging market peers in the long term as lofty valuations ease and investors look to bet on the economy's growth prospects, brokerage group Jefferies said in a note.

The benchmark Nifty 50 Index's price-to-earnings premium to China's Hang Seng Index declined to 115% from 208% in end October, and is in line with the 10-year average of 118%, Chris Wood, global head of equity strategy, Jefferies, wrote in his "Greed & Fear" report.

India's long-term prospects have led the global brokerage to invest 39% of its Asia ex-Japan long-only portfolio in the south Asian country compared with 25% in China.

While foreign investors have sold $2.8 billion on a net basis in Indian markets so far this year, domestic equity mutual fund inflows have remained positive, Wood said.

Domestic equity mutual fund inflows in the first two months of 2023 amounted to 282.33 billion rupees ($3.43 billion), according to official data from the Association of Mutual Funds in India.

The usual challenge of relatively high valuations remain, Wood said, adding that the brokerage will remain slightly "overweight" on India in the Asia Pacific ex-Japan relative-return portfolio.

"The domestic demand story certainly remains intact to justify the continuing belief in the equity market. Loan growth has slowed somewhat but still remains solid ... The recovery in the residential property market also continues," Wood wrote.

© Reuters. FILE PHOTO: A general view of the Bombay Stock Exchange (BSE), after Sensex surpassed the 50,000 level for the first time, in Mumbai, India, January 21, 2021. REUTERS/Francis Mascarenhas

Asian banking systems remain remarkably free from stresses, Wood said, citing a slide in the ratio of non-performing loans in Indian banks to an eight-year low.

($1 = 82.2290 Indian rupees)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.