Time to invest in India: Global brokerage Nomura upgrades India to overweight zone

India’s ratings have been upgraded again to ‘overweight’ from ‘neutral’, this time by financial major Nomura Group of Japan.

Last month Morgan Stanley – another global financial powerhouse – upgraded the country to the ‘oversight’ category.

The upgraded India’s rating by Nomura comes within days after the country’s equity market hit an all-time high.

Nomura on upgrading India’s rating

“The structural story of India is now well known as a major beneficiary of the “China+1” theme, possessing a large, liquid equity market. We see recent softness driven by higher oil prices as an opportunity to raise exposure. 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. Valuations are expensive but will likely remain so in a scenario of policy/government continuity,” Nomura analysts said in their latest strategy report.

It further said a cyclical slowdown from a high base is expected, but will unlikely deter investor optimism.

The stock market is benefiting from a K-shaped economy, high earnings growth market, earnings revisions and domestic flows still holding up well despite higher rates, Nomura added.

What is China+1 strategy?

Coined in 2013, China-Plus-One, or just Plus One is a global business method that refers to a strategy in which companies avoid investing only in China and diversify their businesses to alternative destinations.

Nomura lists some Indian stocks

The global brokerage has suggested a mix of stocks with reasonable relative valuations and domestic growth areas including ICICI Bank, Axis Bank, L&T, Reliance, ITC and MedPlus Health.

In its list of indicative stock ideas, Nomura has also listed those that are likely to benefit from some structural themes like increasing EV adoption – M&M and Uno Minda.

In June, Goldman Sachs had also issued a report saying it is overweight India given the medium-term growth prospects and had recommended foreign investors build exposure in this emerging market.

India main option for global investors

Amid this, veteran investor Mark Mobius, who manages nearly $300 million in assets under management across various countries, in an interaction with CNBC-TV18 said global investors who intend to invest in Emerging Markets, have India as the main option.

Often regarded as the founder of Emerging Market investing, Mobius said his exposure to India is currently at 20 per cent, at least double of the 5-10 per cent exposure he historically had.

“(The) opportunities in India are terrific, and it does not make sense to reduce weightage in India,” Mobius said.

He further said India will be affected with the macro economic changes taking place globally.

With inputs from agencies