Correction likely after a sharp run; buy on dips: Credit Suisse Wealth Mgmt

The recent 'hope rally' in Indian markets was mostly led by a presumption that global central banks, especially the US Fed, may go slow on rate hikes in the rest of 2022 as the inflation cools off.

After a near 15 per cent run in the S&P BSE Sensex and the Nifty50 from July 2022 till date, analysts are turning cautious on the equity markets with those at Credit Suisse Wealth Management expecting a near-term correction.

"A sharp rebound in India equities pushed its valuation premium to near all-time-high levels. The MSCI India index is trading at a valuation premium of 37 per cent and 96 per cent versus the MSCI World and MSCI EM, respectively. India’s 12 month forward PE has expanded to 19.5x, and is currently trading at one standard deviation (STD) above the 10-year mean.