Goldman Sachs upgrades India to "market weight"

Goldman Sachs Group Inc. raised its recommendation on Indian equities citing expectations of some pick-up in the domestic economy and lower risks from the euro area debt crisis. The US investment bank upgraded Indian equities to "market weight" from "underweight", Goldman Sachs analysts led by Timothy Moe wrote in a report yesterday. "Asset markets around the world have discounted a lower probability of a more severe European debt crisis, and we believe these risks will remain relatively muted in the near term," the analysts wrote. "Growth will indeed pick up in India over the next one to two quarters." Goldman Sachs raised its March 2013 estimate for the S&P CNX Nifty Index to 6,100, up 17% from Thursday's closing level.



The Wall Street titan increased its estimate for Nifty companies’ average earnings per share (EPS) growth to 16% from 11% for 2013. The Nifty is up 13% this year and trades at 14.9 times estimated earnings. Goldman Sachs has set a March 2013 target of 6,100 for the Nifty index. Global risk factors that had hit Indian equities late last year had largely abated, while the uncertainty behind the regional elections in Uttar Pradesh and the unveiling of the FY13 budget had dissipated, Goldman said. India's GDP growth will pick up to 7.2% this year (FY13) and 7.8% in FY14, from 6.9% last year (FY12), Goldman added, while slowing core inflation would allow Reserve Bank of India (RBI) to cut the repo rate by 150 basis points during FY13. On challenges, Goldman said that high crude oil prices remain the most significant risk to their positive "view on India.