“从两个国家配置差距的消失可以看出，对中国信心的提升是以牺牲印度为代价的。”美银证券策略师 Ritesh Samadhiya在一份报告中表示。As of the 14th, overseas investors had reduced their holdings of Indian stocks by more than 7 billion US dollars in October, the biggest monthly outflow since a record was set in March 2020. Jefferies anticipates that Indian corporate profit growth may also slow to its lowest level in more than four years.
Starting in October, the “carnival” of the Indian stock market came to an end. As corporate profit growth has slowed, the benchmark index has recently pulled back sharply, and market concerns about India's “peaking” have reignited.
As of the 14th, overseas investors had reduced their holdings of Indian stocks by more than 7 billion US dollars in October, the biggest monthly outflow since a record was set in March 2020. At least some of these funds have been transferred to the Chinese market.
“As can be seen from the disappearance of the allocation gap between the two countries, the increase in confidence in China came at the expense of India.” Bank of America securities strategist Ritesh Samadhiya said in a report.
There are also clear signs that India's macroeconomic growth is slowing down. Analysts at Jefferies Financial Group Inc. predict that Indian corporate profit growth may slow to its lowest level in more than four years.
India's stock market pulls back, and valuations are still high
India's stock market benchmark index fell nearly 3% in October, and this year's increase was reduced to 15%.
Meanwhile, the MSCI India Index fell 2.6% in October. Previously, the index had been rising continuously for 11 months. Even so, the index is still valued at almost 24 times its 12-month forward earnings, while its five-year average valuation is about 21 times. This is more than double the price-earnings ratio of the MSCI China Index.
Furthermore, there are clear signs of a slowdown in India's macroeconomic growth. In September, India's GST revenue growth rate was at its lowest level in more than three years, while passenger car sales fell nearly 19% year over year. Electricity demand declined in August compared to the same period last year, and both manufacturing and service purchasing managers' indices declined.
Reliance Industries Ltd. (Reliance Industries Ltd.) under Mukesh Ambani also performed disappointing in the latest earnings season, which began on October 10 and Tata Consultancy Services Ltd. (Tata Consultancy Services Ltd.) None of the net revenue met expectations. The two companies are leading India's $250 billion industry, helping enterprise customers adopt automation, cloud computing, and artificial intelligence.
According to some analysts, the slowdown in profits was driven by weakening consumer spending and rising commodity prices. Rajat Agarwal, an Asian equity strategist at Société Générale in Bengaluru, said:
“Macro momentum has clearly weakened. We clearly see that the market generally anticipates downside risks, which may put pressure on the market.”
7 billion dollars withdrawn from the Indian stock market
As of the 14th, overseas investors had reduced their holdings of Indian stocks by more than 7 billion US dollars in October, the biggest monthly outflow since a record was set in March 2020. At least some of these funds have been transferred to the Chinese market.
Bernstein's quantitative strategist downgraded Indian stocks from neutral to reduced holdings last week on the grounds that Indian stocks are overvalued in relation to China and other emerging markets, leading to increased vulnerability.
Analysts Rupal Agarwal and Cheng Zhang wrote in a research report released on October 10:
“We have ended our long term visit to IndiaMomentum tradingBecause its valuation is currently at or near an all-time high, the profit cycle is declining.”
