India’s growth forecast track record has not been that great in the last few years said Siddharth Khemka, Head Of Retail Research at Motilal Oswal Securities.
The valuation premium enjoyed by Indian equities over MSCI Emerging Markets has surged to its highest level since 2008. The premium of estimated price-to-earnings multiple of the NSE Nifty50 Index over the MSCI Emerging Market Index now stands at nearly 75 per cent. A similar level was last seen way back in January 2008.
Price has led to the premium as India is the only country among the top four constituents of the emerging market index to gain over 4 per cent for the year so far. China, highest by weight, is down over 20 per cent, while South Korea is down 16 per cent and Taiwan is down nearly 9 per cent for the year so far. Overall, the MSCI Emerging Market Index has declined over 16 per cent during the same time. However, India does not look overvalued when looked at in dollar terms said Alok Jain of WeekendInvesting. The month of December too has seen India outperform other global equity indices on the back of a near 8 per cent fall in crude oil and robust foreign inflows. In fact, India has seen the highest FII inflow of $373 million among other Asian nations. India has also seen the highest passive investment of over $2 billion among emerging markets in the last one month.
Analysts have forecasted earnings per share growth of 4 per cent for the MSCI Emerging Market Index. India’s EPS is expected to grow the most at 16.7 per cent followed by China at 14.3 per cent. India’s growth forecast track record has not been that great in the last few years said Siddharth Khemka, Head Of Retail Research at Motilal Oswal Securities.
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