India’s Always Bullish Analysts Turning Bearish as Mobius Adds
By Shikhar Balwani, Michael Patterson and Weiyi Lim - Oct 22, 2012
Indian stock analysts who predicted gains in the nation’s benchmark index while the gauge fell last year are now turning bearish as equities surge the most since 2009.
More than 1,200 estimates compiled by Bloomberg on Oct. 4 showed analysts projecting a 1 percent drop for the BSE India Sensitive Index (SENSEX) in the next 12 months, after they overestimated returns by an average 21 percentage points in 2011. The benchmark measure has climbed 22 percent this year, the best performance among the largest emerging markets, as international money managers bought a net $18 billion of Indian shares, data compiled by the country’s market regulator and Bloomberg show.
While Mumbai-based securities firm Dolat Capital Market Pvt. advises cutting holdings of State Bank of India because of loan losses and Prabhudas Lilladher Pvt. has downgraded Reliance Industries Ltd. (RIL) on slower earnings growth, Templeton Emerging Markets Group’s Mark Mobius is increasing his Indian holdings. Mobius, who oversees $48 billion, cites Prime Minister Manmohan Singh’s efforts to open up the economy for his bullish stance.
“They are going through a reform process so there’s a lot of opportunities,” Mobius said in an Oct. 12 interview in Singapore. “We are adding now.”
The Sensex index is valued at 16 times reported earnings, the most expensive of the so-called BRIC markets after Braziland about 5 percent below its average since 2000, according to data compiled by Bloomberg. The gauge trades for 2.7 times book value, or assets minus liabilities, a 15 percent discount to its historical average, the data show.
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