Credit Suisse upgrades Indian equities to neutral
REUTERS – Credit Suisse upgraded Indian equities to “neutral” from “underweight,” citing cheap valuations, easing headline inflation and slower earnings estimate downgrades in December.
“This is only the 14th quarter since 2000 that India has been among the four most undervalued markets in the region,” the bank said in its research note dated January 4, adding that on 12 of those 13 previous episodes, MSCI India outperformed MXASJ (MSCI Asia ex. Japan) after 12 months.
The four cheapest markets in Asia are China, Korea, Hong Kong and India, which was the bank’s biggest underweight market since September 2010, according to Credit Suisse’s price-to-book versus return-on-equity valuation model.
The Sensex shed 24.6 percent in 2011 to be the world’s worst-performing major equity market. The benchmark’s fall in 2011 was only the second annual decline in a decade.
Financials, materials, energy and consumer cyclicals are the four most undervalued sectors in India, Credit Suisse said.
It added Tata Steel, Tata Motors and Reliance Industries to its model portfolio, along with Sun Pharmaceutical and Bharti Airtel.
However, it continued to have concerns over India’s large current account and fiscal deficits, it said.
(Reporting by Abhishek Vishnoi; Editing by Aradhana Aravindan)
Article source: http://feeds.reuters.com/~r/reuters/INbusinessNews/~3/_8dXiqmGOao/india-research-creditsuisse-idINDEE80406F20120105
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