As Indian Prime Minister Narendra Modi prepares to meet with President Barack Obama at the White House, Julie Dickson, portfolio manager at Ashmore, provides an outlook on Indian equities:
“We are cautiously optimistic on India. Earnings upgrades and a positive outlook for the economy have started to come through. Some manufacturers are already starting to see a pickup in activity resulting from government policy to kick start infrastructure investment, as well as continued positive consumer sentiment following Modi’s election.
“However, some risks remain that the market might overshoot, as the euphoria gives way to longer-term reforms dampening sentiment. We do remain bullish in the long term and see significant earnings upside over the next two to three years, but some valuations are starting to look stretched, particularly in mid-caps.
“Companies in sectors such as Financials, Consumer Goods are looking attractive with improving balance sheet quality and local retail demand. Earnings are coming in stronger than expected and valuations are looking attractive.”