BNP Paribas on Wednesday upgraded India to ?overweight? from ?underweight?, citing improved earnings environment and a better macro outlook. In a strategy report by its Asia Pacific strategist, Manishi Raychaudhuri, the brokerage said the next catalyst for the Indian market would be the election results.
?Recent opinion polls suggest that the BJP-led NDA alliance is gaining momentum and is poised to get quite close to the ?magic number? of 272, which we believe is the outcome most favoured by the equity markets,? it noted.
It increased its weight on India through Tata Motors, ITC, HDFC Bank and ICICI Bank. The brokerage reckoned that the actions of policymakers since September 2013 have helped the Indian currency regain investor credibility, while a tight curb on gold imports, coupled with improved merchandise and service exports, sharply reduced the current account deficit.
It also acknowledged an improvement in India’s earnings environment with Sensex consensus earnings estimates witnessing 2-3% upgrade in the last few months. BNP currently sees benchmark Sensex EPS for fiscal 2015 at R1,554 against R1,478 at the end of September 2013.
