While the other emerging markets have seen upgraded earnings in the last six moths; India has had downgrades, points out Adrian Mowat of JP Morgan.
Amidst heightened exuberance about India’s performance among the emerging markets, many large corporate houses continue to remain bullish about the country’s growth prospects. However, Adrian Mowat of JP Morgan says that India is an expensive market with earnings downgrade. In conversation with CNBC TV18, the chief emerging markets and Asian equity strategist said,”I’m concerned about India’s relative earnings revisions. Broadly, emerging markets have upgraded earnings in the last six months. But if you look at India, we’ve had downgrades.” Adrian Mowat says that he’s neutral on India. “India is a market we’re fundamentally anxious about,” he said.
Talking about his neutral stance in India, he explained, “Reason we are not underweight on India in our emerging market portfolio is that flow of household savings into equities remains very strong.” The MSCI emerging markets index is up by 23% in the year so far. The BSE Sensex has returned 18.4% in the same period.
Earlier this month,CLSA told ET Now, “Don’t see a significant upside from here on for next 12 months”.The brokerage and investment firm believes that Indian markets will grow at low double digit growth in the next one year. Sharing its outlook for various sectors, CLSA pointed out that IT has become a low growth sector, and investors should not expect double digit growth going forward. CLSA predicts that the growth will be 6-8% going forward. The firm advised the investors against holding on to IT stocks for a period of more than 3 years.
Adrian Mowat of JP Morgan too concurred that there are concerns in the IT and pharma space. “We are underweight on IT and Healthcare,” he said. The BSE Healthcare Index has lost more than 14% in the last one month. The BSE IT Index is down by more than 4% in the last one month.
Speaking about global markets, he said that the US equity markets looks more vulnerable. “There are concerns about lack of policy direction. Overall, the nervousness is more of DM (developed markets) issue rather than an EM (emerging markets) issue at this point in time,” he points out.