Key Points
Despite Nifty crossing the 19,000 mark for the first time with $10 billion in foreign institutional investor inflows, global brokerage firm CLSA remains cautious on Indian equities..
According to CLSA, the reasons for their cautious stance include rich valuations, margin erosion, overly optimistic earnings growth expectations, the Reserve Bank of India lagging behind other emerging market central banks in policy easing, and overbought conditions in the market..
CLSA believes that other emerging markets such as Brazil, Mexico, and Indonesia are better positioned for policy easing.ANI..
"We remain cautious for now, given exceedingly rich valuations, margin erosion depleting Indias relative profitability, consensus EPS growth expectations remaining too optimistic (certainly versus the delivered track record), the RBI likely lagging EM central banks in the timing and scale of policy easing, and our econometric model signalling the market is 14% overbought," CLSA said in a report...
"Although we have some sympathy for Indias relative valuation being more expensive since 2020 given the structural challenges faced by China and hence that markets depleted valuation multiples, we struggle to justify the 80% average level," the brokerage said.. 2) Margin erosion..
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