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27
November 2018
 |
HSBC
(The Total Investment & Insurance Solutions)
Brokerage firm HSBC upgraded Indian equities
to “neutral” from “underweight” on Tuesday, saying valuations were more
reasonable, investors’ holdings were very low and strong earnings growth would
continue next year.
India is one of the fastest growing markets
in Asia, with MSCI India EPS growth consensus — a design to measure large-,
mid- and small-cap segments of the stock market, seen at 18.8 percent in 2018
and 24 percent in 2019, HSBC said in a note titled “The Flying Dutchman”.
With the parliament elections scheduled for 2019, HSBC said it expected
equities to gain like in the previous three polls, probably “because more
pro-growth policies are implemented before elections or that the market is more
willing to anticipate such policies”.
MSCI India has underperformed MSCI’s broadest
index of Asia-Pacific shares outside Japan since the end of August, primarily
due to currency weakness and volatile oil prices which HSBC expects to remain
key risks going forward.
As of Monday, Indian stock markets had declined about 6 percent since August,
hurt by issues at banks and non-banking financial companies, but positive
September-quarter earnings have boosted investor sentiment recently.
Separately, Morgan Stanley said India’s
growth recovery was on track as policy decisions remain supportive of an
improvement in productivity dynamics with GDP forecast to rise 7.7 percent and
7.6 percent in 2018 and 2019, respectively.
Morgan Stanley said it expected the Reserve
Bank of India to resume the rate hiking cycle in the second quarter of 2019 and
build in two increases in 2019 and two more the following year, as inflation
rises from the 2018 low.The Total Investment & Insurance Solutions
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