With earnings momentum set to take off and domestic investors buying, equity markets have “material upside” in the next three years, US brokerage BlackRock said in its outlook for Indian markets.
“Equity valuations are reasonable, earnings momentum looks set to take off and domestic investors are buying. We therefore think the 30-stock BSE Sensex index has material upside in the next three years.”
“Equities could dip 5-10 per cent in the short run, pummeled by a geopolitical hiccup or the anticipation of a US rate rise. Any correction, however, is likely to draw in buyers,” BlackRock said in its outlook.
BlackRock favours financials, consumer discretionary and small caps, but is lukewarm about staples, the report said.
“India has gone from a castaway market to investor darling – in the space of a year. The election of Prime Minster Narendra Modi and the appointment of economist Raghuram Rajan as head of the Reserve Bank of India (RBI) have much to do with it,” it said.