Indian markets offer hope in a world of sparse earnings

Bad news first: Indian corporates are unlikely to show great earnings for the fourth quarter. But the good news is: the numbers could turn out to be relatively better than companies in other emerging markets that compete for inflows with India.

According to two separate surveys of fund managers conducted by foreign brokerages Credit Suisse and Bank of America-Merrill Lynch (BoFA-ML), Indian is the most preferred equity market in Asia for investments. In the Credit Suisse survey, fund managers, with $18-trillion of asset under management, have maintained ‘overweight’ position for Indian, Chinese and Japanese markets.

This is the view of more than 50% of the fund managers who participated in the survey. The BoFA-ML survey shows that 43% of the participants picked India as the most favourite equity market in Asia for calendar 2015.

This was followed by China at 26%. Just 4.4% investors consider India as the least preferred market. For foreign investors, especially global funds, with a long-term vision, having exposure to Indian markets works well as earnings growth visibility in other emerging markets seem low.

Hence, despite the fact that the pace of growth in earnings is yet to match the Dalal Street rally, these investors still prefer the Indian market to other EMs.