Nomura upgrades India to overweight; ICICI, Axis and RIL among top picks
Nomura has upgraded its ratings on India to 'overweight' as it sees the recent 'softness' in the stock market driven by higher oil prices as an opportunity to raise bets here. The firm's top stock picks in India include ICICI Bank, Axis Bank, L&T, Reliance Industries, ITC, Medplus Health, and Uno Minda.
«We see recent softness driven by higher oil prices as an opportunity to raise exposure,» said Nomura's analysts including Chetan Seth, Anshuman Agarwal, and Ankit Yadav in the firm's Asia strategy note to clients.
«While this weakness may persist in the near term, thus presenting even better timing, we think the window of opportunity might not be open for too long.»
The Nifty has fallen nearly 2.5% from its all-time high of 20,222 hit on September 15. The index gained 0.3%, or 52 points, to close at 19,716 on Wednesday.
«The structural story of India is now well known as a major beneficiary of the „China+1“ theme, possessing a large, liquid equity market,» said Nomura's analysts.
The firm said India's share valuations are expensive and will remain so on account of government and policy continuity.
While it expects a cyclical slowdown in India, that may not deter investor optimism.
It said 'intense politicking' into general elections in 2024, China re-rotation and sustained high oil prices are potential risks to the 'overweight' call on India.
China
Nomura is 'tactically overweight' on China as it sees value in its stocks at current levels. «We think positioning is very light, with China-A shares sustaining record net-outflows over the past few weeks indicating how bearish the sentiment is,» said the analysts.
