Cheap valuations reason behind India upgrade: Credit Suisse

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Indian markets saw the second biggest fall in a decade in 2011. India’s macroeconomic environment is still under a lot of pressure due to policy inertia, high inflation numbers and a depreciating rupee. For 16 months, Credit Suisse had been underweight India. The investment bank’s head of global emerging markets and Asian equity strategy Sakthi Siva says when they downgraded India in 2010, it was the most expensive emerging market (EM) in the region. India has been upgraded to neutral now. India’s underperformance versus its peers has made it an attractive destination for investors to park their money. “India is now the fourth cheapest market from the EM basket. The upgrade is largely driven by its cheap valuations,” she adds. Siva is looking at a 10-15% upside in most Asian markets, including India. Credit Suisse is also adding Tata Steel , Tata Motors and Reliance Industries to the model portfolio in addition to Sun Pharma and Bharti .