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The “Sell-Side” Consensus: Most Bullish Since Feb-08
The market has corrected by about 14% since the Key Debate: •
start of the year, aggregate earnings and GDP growth estimates
have been revised downward, and the conviction level of the buy-
side is at a two-year low. Has all this led to change in view of the
sell-side vs. what we saw in July 2010?
The sell-side consensus are most positive on Indian What’s New: •
equities in 2.5 years (as represented by the MS coverage stocks,
which account for 70% for India’s market cap) as reflected in the
mean consensus rating in our latest biannual update on consensus
ratings. The overall conviction level has risen to 0.46 (wherein a
stock rated as buy gets 1, hold gets 0, and sell gets -1) from 0.39
six months ago. On a relative basis, the consensus appears bullish
across the cap curve compared to July 2010. It seems to be most
bullish on mega cap, mid-caps, and small caps.
We find that the consensus has a “buy” or equivalent •
recommendation on 71% of our coverage universe versus 61% in
Jul-10 and 51% in Jul-09. This is the most positive sell-side
consensus seen since Feb-08. MS analysts’ have a “buy” ratings
for 65% of the universe.
Strikingly, for the first time since MS Analysts vs. Consensus: •
our July 2008 update, MS analysts agree with the consensus on
61% (76 out of the 123 companies) of the ratings on our coverage
universe. Further, MS analysts as well as consensus have a “buy”
or the equivalent rating on 63 out of these 76 stocks.
MS analysts differ from consensus Where MS Analysts’ Differ: •
on just over one-third of our coverage universe. The MS rating is
below the consensus rating in about half of these stocks.
Within the MS coverage universe, there are 48 stocks in which •
70% or more of the street has a “buy” or equivalent rating. MS
analysts differ with the street on 8 out of these 48 stocks. About
half of these 48 stocks are in the Financials and Industrials
sectors. On the other hand, there are only 4 stocks in which 60%
or more of the street has a “sell” or equivalent rating (see page 5
for details). MS analysts do not have a “buy” or equivalent rating
for these stocks. Please see page 4 and 5 for the most bullish and
bearish consensus calls along with the contrarian calls between
MS and consensus.
The average consensus ratings are Consensus Sector Calls: •
most positive for Industrials, Financials, Energy, and Consumer
Discretionary (in that order), while they are least positive for
Telecoms and Materials (see page 6). Since our last update, the
conviction has gone up the most for Consumer Discretionary,
ratings) and Energy. Out of the Telecoms (although, still negative
10 MSCI sectors, only Utilities has seen a fall in average rating.
The sell-side consensus conviction on stocks is very Conclusion: •
strong – reminiscent of February 2008. The opportunity, in our
view, lies at the sector level with scope to take some contrarian
bets versus the consensus view. Our strongest counter consensus
opinions are in Telecoms, Materials, and Consumer Discretionary
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The “Sell-Side” Consensus: Most Bullish Since Feb-08
The market has corrected by about 14% since the Key Debate: •
start of the year, aggregate earnings and GDP growth estimates
have been revised downward, and the conviction level of the buy-
side is at a two-year low. Has all this led to change in view of the
sell-side vs. what we saw in July 2010?
The sell-side consensus are most positive on Indian What’s New: •
equities in 2.5 years (as represented by the MS coverage stocks,
which account for 70% for India’s market cap) as reflected in the
mean consensus rating in our latest biannual update on consensus
ratings. The overall conviction level has risen to 0.46 (wherein a
stock rated as buy gets 1, hold gets 0, and sell gets -1) from 0.39
six months ago. On a relative basis, the consensus appears bullish
across the cap curve compared to July 2010. It seems to be most
bullish on mega cap, mid-caps, and small caps.
We find that the consensus has a “buy” or equivalent •
recommendation on 71% of our coverage universe versus 61% in
Jul-10 and 51% in Jul-09. This is the most positive sell-side
consensus seen since Feb-08. MS analysts’ have a “buy” ratings
for 65% of the universe.
Strikingly, for the first time since MS Analysts vs. Consensus: •
our July 2008 update, MS analysts agree with the consensus on
61% (76 out of the 123 companies) of the ratings on our coverage
universe. Further, MS analysts as well as consensus have a “buy”
or the equivalent rating on 63 out of these 76 stocks.
MS analysts differ from consensus Where MS Analysts’ Differ: •
on just over one-third of our coverage universe. The MS rating is
below the consensus rating in about half of these stocks.
Within the MS coverage universe, there are 48 stocks in which •
70% or more of the street has a “buy” or equivalent rating. MS
analysts differ with the street on 8 out of these 48 stocks. About
half of these 48 stocks are in the Financials and Industrials
sectors. On the other hand, there are only 4 stocks in which 60%
or more of the street has a “sell” or equivalent rating (see page 5
for details). MS analysts do not have a “buy” or equivalent rating
for these stocks. Please see page 4 and 5 for the most bullish and
bearish consensus calls along with the contrarian calls between
MS and consensus.
The average consensus ratings are Consensus Sector Calls: •
most positive for Industrials, Financials, Energy, and Consumer
Discretionary (in that order), while they are least positive for
Telecoms and Materials (see page 6). Since our last update, the
conviction has gone up the most for Consumer Discretionary,
ratings) and Energy. Out of the Telecoms (although, still negative
10 MSCI sectors, only Utilities has seen a fall in average rating.
The sell-side consensus conviction on stocks is very Conclusion: •
strong – reminiscent of February 2008. The opportunity, in our
view, lies at the sector level with scope to take some contrarian
bets versus the consensus view. Our strongest counter consensus
opinions are in Telecoms, Materials, and Consumer Discretionary
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