Adding to the slew of bullish forecasts for India, foreign brokerage Credit Suisse believes the country will remain an outperformer in a world struggling for growth and the Indian market is likely to pay a greater premium for growth.
According to a report by Neelkanth Mishra and Ravi Shankar, “…Indian market is not expensive yet. It’s likely to see the strongest earnings growth, with among the least severe downward revisions. However, we do not expect the nature of growth in India to change, and expect the market to prefer companies with strong medium-term earnings growth visibility.”
Economists with the brokerage expect “India to see the fastest USD nominal GDP growth in 2015, with the growth gap between India and the rest of the world expanding”. An extremely low base and a stark improvement in state-level governance, they believe will be key contributors to India’s medium-term growth prospects.
Credit Suisse cautions that the impact of falling commodity prices will be slightly positive, but lower than the consensus forecast. The key driver, according to them, will be the possibility of increased global quantitative easing next year on the back of return in deflationary fears in developed countries. The quantum of easing in 2015. they say, could be twice that in 2014 while average policy rates stand at 20 basis points.
Their top buy ideas include Gujarat Pipavav, Havells, HCL Technologies, HDFC Bank, Maruti, Kajaria, Shriram Transport Finance and Sun Pharma while Bharti, BHEL, SBI and Tata Steel are their least preferred stocks.