Credit Suisse has upgraded equity market Global financial services on Wednesday and this up gradation has been done from domestic equity markets from underweight to neutral as valuation has come down to attractive levels.
In its Asia Pacific Equity Research Investment Strategy report, Credit Suisse said India joins the cheapest four club as it had moved from being the most overvalued market in the region in September 2010 to now the fourth-most undervalued market on its price-to-book versus return on equity valuation model. BRICs - All four of these countries (benchmark indices) were down sharply in 2011. Brazil was down -18%, Russia was down -22%, and China/Hong Kong was down roughly -21%.
The emerging markets were fighting a fierce battle with inflation in 2010 and most of 2011, forcing their central banks to tighten monetary policy and slow down growth and domestic consumer prices.
Now we’re seeing a shift as inflation has receded, and these countries are looking to jump start their economies again. This shift should continue with more easing as the year progresses. We’ve already seen Brazil cut rates several times, and China has lowered banking reserve requirements to boost lending.
Credit Suisse now feels that India is attractively poised and this report must be seen by Fiis, so that they come in hoards and bring the glorious days back in Indian stock market as bullishness in market is enjoyed by one and all and it makes sense to make money with daily intraday tips which is the ideal option for the day traders.
As of now India is the best destination because we feel that biggest headwinds for 2012 continue to lie in Europe. The sovereign debt crisis is the market’s number one concern. Eurozone countries and European banks face massive funding requirements, and will be dependent on refinancing or rolling over their debt at reasonable interest rates. It means that the central banks will continue to flood the markets with unlimited liquidity. If the IMF or the Eurozone bailout funds prove insufficient, the European Central Bank will have no choice but to do more. They are already on the hook for trillions of euros.
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