Goldman Sachs upgrades India outlook to overweight

Chennai: Global investment bank Goldman Sachs has upgraded its outlook on India to ‘overweight’ from ‘market-weight’ amid expectation of improving corporate earnings, reports said.

Goldman Sachs expects corporate earnings to grow 16 per cent this year, reports said, amid rising expectations of a stable government forming post elections.

“We think risk-reward on India looks favourable again given the sharp underperformance in Jan/Feb, signs of improving earnings and a pick-up in foreign positioning from lows amid rising market expectations of a potentially stable government,” reports said the global investment bank as saying.

Goldman Sachs had in September lowered its rating on India to ‘marketweight’ due to rich valuations, political, earnings and macro risks.

The NSE benchmark Nifty ended at 11,532.40 on Tuesday, rising for the seventh straight day. The index has gained over eight per cent over the last one month as the incumbent BJP-led central government’s perceived though stance on national security boosted chances of Narendra Modi govt’s returning to power in the forthcoming general elections, reports said.

According to the investment bank, the recent market rally has led to Nifty recovering 65 per cent of its underperformance this year as against the region. Goldman Sachs is bullish on domestic cyclicals over defensives and exporters, reports said.

It may be noted that foreign portfolio investors have raised their investment in India over the last one year, bringing shares worth $4.5 billion in the past one month.

Other than Goldman, HSBC and CLSA have also maintained a bullish stance on Indian equities.

NT Bureau