Indian stocks are too over priced
They are yet to mirror the slower growth India’s economy is passing through
Hong Kong (Bloomberg): The recent outperformance in Indian stocks may eventually fade. That’s according to Ronald Chan, Manulife Investment Management’s chief investment officer for Asia ex-Japan equities.
Indian shares have yet to price in the nation’s slowing economy, which could expand at a rate of between 4.5-5 per cent amid ongoing struggles with credit issues, sluggish consumption and conservative stimulus policies, Chan said. Growth of 5 per cent would be India’s slowest pace since 2009.
The benchmark S&P BSE Sensex Index climbed for a third day Wednesday, quickly recovering from the losses triggered by Prime Minister Narendra Modi’s latest budget. The gauge is down only 0.3 per cent this year.
The current relative strength in Indian equities may be due to a handful of top-weighted stocks outperforming and to inflows from investors avoiding markets more affected by the Wuhan coronavirus, Chan said by phone Tuesday. “Once China stabilizes, I think people would come to the reality that India’s growth trajectory will get lower,” he added.