Citi raises its rating of India to "overweight" due to steady economic growth and profits

Citi raises its rating of India to "overweight" due to steady economic growth and profits

Citi raises its rating of India to "overweight" due to steady economic growth and profits

Citing solid profits and economic growth momentum, Citigroup analysts upgraded India to "overweight" compared to "neutral" in their emerging markets assignment on Friday.

With a goal of 23,900, the brokerage projects a 7% increase in India's blue-chip NSE Nifty 50 index between now and the conclusion of the current fiscal year, which ends in March 2025.

On Friday, the Nifty 50 finished at 22,055.20. Thus far in 2024, the benchmark has lagged the MSCI Emerging Market Index.

Citi's opinion is supported by the assumption that India's economy, which is expanding at the highest rate among its major peers, would continue to develop robustly, with 6.8% growth in the current fiscal year.

Surendra Goyal, managing director as well as head of Citigroup's Indian research, said in a note on Friday that the brokerage's forecasts suggest a profits CAGR of 13% for FY24–FY26, with a generally steady trajectory. He also attributed the India upgrade to continued economic development.

Additionally, it credited a consistent earnings trajectory for India's one-year future price-to-earnings (P/E) of 20x, which is somewhat higher than the long-term norms.

The brokerage is still "overweight" when it comes to public sector corporations, banks, insurance, automakers, and capital goods industries in India. It suggests being "underweight" in the following areas: paint businesses, consumer durables, information technology corporations, and metals.

China's stock markets saw a recent surge amid declining fundamentals, according to Citi, which downgraded the country from "overweight" to "neutral".

Since the beginning of April, foreign portfolio investors have sold Indian shares for a total of around 191 billion rupees ($2.29 billion).

In contrast, China's markets have benefited from an increasing proportion of foreign inflows, which has been aided by values that are comparatively lower than those of India.

In contrast, global stockbroker Jefferies increased the proportion of China in its Asia Pacific ex-Japan relative-return portfolio. Citi has downgraded China.

Citi maintained its "underweight" rating for nations in Latin America while restating its "overweight" rating for Taiwan and Korea.

$1 is equal to 83.4700 Indian rupees.