Mumbai: Citi has downgraded India to 'neutral' from 'overweight', citing elevated valuations and a moderation in earnings growth forecasts.
The brokerage maintained its 'overweight' on China, Korea, and the Philippines, reflecting better earnings revision trends and attractive valuations.
"India remains most expensive market (23 times) vs both its peers and its own average valuation," said Citi. The brokerage said India's macro story looks better than peers and a US trade deal is possible, but market's earnings growth outlook "no longer looks exceptional" against backdrop of high valuations.
Citi prefers banks, NBFCs, healthcare, and telecoms while remaining underweight in IT services, metals, and staples. "A turnaround in FII sentiment (relatively favorable trade deal with US, consumption growth recovery, etc., could aid) could support valuations/performance," said brokerage.
The brokerage maintained its 'overweight' on China, Korea, and the Philippines, reflecting better earnings revision trends and attractive valuations.
"India remains most expensive market (23 times) vs both its peers and its own average valuation," said Citi. The brokerage said India's macro story looks better than peers and a US trade deal is possible, but market's earnings growth outlook "no longer looks exceptional" against backdrop of high valuations.
Citi prefers banks, NBFCs, healthcare, and telecoms while remaining underweight in IT services, metals, and staples. "A turnaround in FII sentiment (relatively favorable trade deal with US, consumption growth recovery, etc., could aid) could support valuations/performance," said brokerage.
