(1888PressRelease)
June 25, 2009 - ‘Capital Worldwide’ analysts issued their initial advisory to investors in an email several weeks ago, following the conclusive victory of the Congress party at the Indian national elections on the basis of more favourable fund flows and liquidity in the South Asian nation. In light of a downgrade of China equities by BNP yesterday, ‘Capital Worldwide’ have once again affirmed their position to investors.
Chinese shares were cut to “neutral” from “overweight,” whilst India’s remained an attractive prospect at an “overweight” rating, said the latest ‘Capital Worldwide’ email to investors. The Bombay Stock Exchange Sensitive Index may extend its rally by another 11 percent, the report continued, advising customers to buy State Bank of India and sell Chinese peers including Industrial & Commercial Bank of China Ltd.
The Sensex has surged 54 percent this year, with more than half the gains coming after the Congress party’s election victory last month. India is the world’s third-best performer in 2009 so far, lagging behind only Peru and Russia among the 92 markets tracked by Bloomberg.
“Valuations, flows and liquidity are turning more favorable to India relative to China,” the ‘Capital Worldwide’ email said, predicting that the Sensex may continue gaining to 16,500 from 14,870.9 at yesterday’s close.
Industrial & Commercial Bank, the world’s largest lender by market value, has climbed 21 percent this year in Hong Kong trading. State Bank, India’s largest, has rallied 46 percent.
‘Capital Worldwide’ perception of recent economic events stated that India’s economy stabilized in the first quarter, maintaining the 5.8 percent pace of expansion in the preceding three months. Growth in China’s gross domestic product slowed to 6.1 percent from 6.8 percent in the same period, owing to the dependence on overseas sales.
Indian stocks are valued at about 2.8 times book value, more than the 2 times in China, according to ‘Capital Worldwide’. Still, return on equity in India is 22 percent, the second-highest in Asia after Indonesia, while China is 17 percent.
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