MUMBAI: Global financial sector powerhouse Goldman Sachs on Monday joined a growing list of major brokerages that upgraded India to ‘overweight’ category. Analysts at Goldman Sachs believe in India’s strong economic growth prospects, which is driven by domestic demand, constant flow of money into the market from mutual funds and the expected shift of supply chain from China.
In recent months CLSA, Morgan Stanley and Nomurahave also upgraded Indian stocks.Goldman Sachs expects India’s GDP to grow at 6.5% in 2023 and a tad lower rate of 6.3% in 2024.
On Monday, while upgrading India, Goldman Sachs also downgraded Chinese stocks that are traded in Hong Kong to ‘marketweight’ category, mainly because of low earnings growth. It also said that 2024 could be a ‘tricky’ period for the Asia Pacific region but India would remain an outlier that would continue to grow, supported by steady earnings growth and macroeconomic stability.
Goldman Sachs’ analysts said that India offers the “most promising long-term growth opportunities in the region, with the potential for mid-teens earnings growth in the coming years”. They expect a “largely domestic-oriented growth” providing investors with a diverse array of “alpha-generating themes”, including initiatives such as Make-in-India, large-cap compounders and mid-cap multi-baggers.
The foreign broking major also warned that in the near term, there could be some uncertainties in the market due to the state elections and the Lok Sabha elections in the first half of 2024. These events “may increase volatility, but this can be hedged inexpensively,” analysts said.
The report by Goldman Sachs also pointed out that in India, domestic buying has been offsetting periods of concentrated selling by foreign funds, “with nearly $2 billion (Rs 16,500 crore) monthly mutual fund inflows into systematic investment plans, a noteworthy source of added demand.”
In recent months CLSA, Morgan Stanley and Nomurahave also upgraded Indian stocks.Goldman Sachs expects India’s GDP to grow at 6.5% in 2023 and a tad lower rate of 6.3% in 2024.
On Monday, while upgrading India, Goldman Sachs also downgraded Chinese stocks that are traded in Hong Kong to ‘marketweight’ category, mainly because of low earnings growth. It also said that 2024 could be a ‘tricky’ period for the Asia Pacific region but India would remain an outlier that would continue to grow, supported by steady earnings growth and macroeconomic stability.
Goldman Sachs’ analysts said that India offers the “most promising long-term growth opportunities in the region, with the potential for mid-teens earnings growth in the coming years”. They expect a “largely domestic-oriented growth” providing investors with a diverse array of “alpha-generating themes”, including initiatives such as Make-in-India, large-cap compounders and mid-cap multi-baggers.
The foreign broking major also warned that in the near term, there could be some uncertainties in the market due to the state elections and the Lok Sabha elections in the first half of 2024. These events “may increase volatility, but this can be hedged inexpensively,” analysts said.
The report by Goldman Sachs also pointed out that in India, domestic buying has been offsetting periods of concentrated selling by foreign funds, “with nearly $2 billion (Rs 16,500 crore) monthly mutual fund inflows into systematic investment plans, a noteworthy source of added demand.”
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