The country’s economic growth is expected but to be sluggish and the investment cycle is unlikely to take off this year, but foreign investors are overweight on India.
A Bank of America Merrill Lynch India Strategy report noted that investors have been increasing their position in India.
“Majority of investors we met were slightly overweight India with probably less than 10% being under-weight India,” said the report authored by Jyotivardhan Jaipuria and dated May 14.
“While we think rates can be cut and lead markets higher, our view is that GDP growth will continue to be sluggish with the investment cycle unlikely to take-off this year, a view echoed by most clients. Our view that EPS growth for FY14 will be around 8% and Sensex EPS well under Rs1300 was treated as more bearish than consensus by most clients,” it added.
Politics may be the factor to watch out for, with the state elections in November and the general elections the next year, according to the report.
The brokerage had met with around 65 investors in the United States and in Asia.Investors are said to be buying rate sensitive stocks though they are still avoiding low quality and high debt companies, according to the brokerage.
Bank of America Merrill Lynch recommended autos and banks.
