The downgrade by Goldman Sachs comes after a number of foreign brokerages such as Morgan Stanley, UBS and Nomura recently slashed India rating, citing expensive valuations.
Goldman Sachs said India stocks appear well-priced for now, ET NOW reported. It said India may see growth as it recovers from the adverse impact of the pandemic. In fact, Goldman Sachs sees India to lead growth in Asia over the next two years.
It said valuations will remain quite sensitive to interest rates and believes cyclical recovery and longer-term digital development themes remain attractive.
#MarketsWithETNOW | @GoldmanSachs upgrades offshore #China, ASEAN stocks; downgrades India. Check out its views on… https://t.co/2NciSm9qBT
— ET NOW (@ETNOWlive) 1636691047000
Two weeks ago, Morgan Stanley had also downgraded India equities to equal-weight.
Morgan Stanley said it expects a structural multi-year earnings recovery in India but at 24 times forward price-to- earnings, it will look for some consolidation ahead of US Federal Reserve’s tapering, an RBI hike in February and higher energy costs. UBS had, a week earlier, suggested that Indian stock valuations look unattractive. The foreign brokerage assigned an ‘underweight’ to India while double upgrading the rating for China equities to ‘overweight’.
Recently, Nomura also downgraded Indian equities from ‘overweight’ to ‘neutral’ due to unfavourable risk rewards and high valuations.
