Global Courant
According to Goldman Sachs strategist Sunil Koul, India is by far the “best structural story” of emerging markets. It’s time for investors to consider returning to India, Koul, vice president of Asia-Pacific portfolio strategy at the investment bank, told CNBC’s “Street Signs Asia” on Friday. “The amount of interest we are seeing, especially from global investors, is unprecedented,” he added. That’s despite Indian stocks already skyrocketing as the country’s benchmark indexes BSE Sensex and Nifty 50 rose to new all-time highs on Friday, according to data from Refinitiv. “Appraisals are expensive, that’s for sure,” admitted Koul. “But we take comfort in the fact that the fundamentals are so strong that the macros look very stable. You have earnings that are up over 15% in the first quarter. The numbers are pretty strong.” He advised investors to buy “every possible weakness”. “I think you can still find some good quality companies at reasonable valuations,” he added. According to Koul, India has historically had a “very strong” track record of generating returns. He said Indian stocks have made a compound annual return of 16% in local currency terms and 13% in dollar terms over the last 20 years. That is twice as much as in broader emerging markets. As such, he described India as “the most fertile ground for stock picking”. It also has a large share of what Goldman analysts call “multibagger” stock, according to Koul. These share a number of characteristics, including high realized growth rates, high capital return ratios and cheap starting valuations. Koul told CNBC on Friday that he still likes banks because valuations are cheaper. “Banks are the only sector still trading at mid-cycle valuations. They are gaining market share from non-banks,” he said. Goldman Sach screened 25 Indian large-cap stocks for stocks with an attractive growth and valuation profile. Four banks meet the criteria: HDFC Bank, ICICI Bank, State Bank of India and Kotak Mahindra Bank. Shares of HDFC Bank and ICICI Bank Trade in the U.S. Global investors seeking exposure to Indian stocks, including the State Bank of India, should consider an India-focused ETF such as VanEck India Growth Leaders ETF. SBI accounts for 4.4% of the fund. Kotak Mahindra Bank can be accessed through the Nifty India Financials ETF where it makes up 4.3% of the shares of the ETF. Koul also likes names in infrastructure and cement, with UltraTech Cement and construction company Larsen & Toubro both appearing on Goldman’s screen. UltraTech Cement is available to global investors through the ProShares MSCI Emerging Markets Dividend Growers ETF, where it accounts for 2.7% of the holdings. Larsen & Toubro is held in the iShares India 50 ETF, with a weighting of 3.5%. – CNBC’s Michael Bloom contributed to this report.
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Goldman Sachs shares top stocks to buy in India as investor interest ‘off the charts’
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