18/09/2018
As an Investment management firm, we Hampshire Spilsby were recommending clients to buy Indian equities from September 2013 onward on expectations of pro-growth government policies and structural reforms that can lead to a recovery in corporate profits. The market has more than doubled since then and outperformed the regional peers by 60 percentage points in dollar terms. The risk reward for Indian equities is less favorable at current levels and we lower our investment view from overweight to market weight. Our research finds out stretched valuations as Indian equities are most expensive in Asia. Macro volatility on account of crude and tighter financial conditions, earnings already priced in at current levels, domestic institutional investment flows slowed for four consecutive months, event risks in form of elections and increase in fiscal deficit. We advises investors to hedge long stock positions in India. Look at rural recovery and affordable household everyday stocks like Colgate, Palmolive, Emami, Britannia and Mahindra & Mahindra.
Watch out for stocks with stable sales or earnings growth profiles like HDFC bank, TVS, Eicher motors and L&T. Consider exporters and export driven automakers that stand to benefit from the Indian Rupee’s depreciation.
