H2 2011 India equity outlook: Position for a year-end rally, despite a challenging environment ::Credit Suisse

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H2 2011 India equity outlook: Position for a year-end rally, despite a challenging environment

• Macroeconomic data indicates a temporary moderation in growth, which is positive for controlling inflation.
• While the top-down outlook is looking pessimistic due to concerns about growth and government policy action, the bottom-up view from the corporate sector is indicating a more positive picture.
• We expect the rate tightening cycle to be completed in H2 2011, driving a positive momentum in equities toward the year end.
• After the recent correction, the Sensex trades at an attractive valuation of 14.5x FY 2011E and 12x FY 2012E earnings.