What’s Working and What’s Not for India ?

India continues to reside in the Glamor quadrant as composite momentum stays strong, while valuation remains expensive. India has a positive beta to the regional markets and would likely benefit from an Asian bull, according to our RAM analysis.
Stronger US$ against regional currencies would further improve India’s return.

Valuation factors delivered mixed results with Trailing PE and Price/Cashflow in the top 5 factors under unrestricted model over the past one month. Price/Sales is the only style factor which displayed negative returns in both models over this period. However in the long-run (10y), valuation strategies generated positive returns for both of the models.

Trailing Net margin was the only factor that did well in this category over the last few months. In January, it ranked 4th and 5th in the restricted and unrestricted models, respectively. India would generally do well if value stocks outperform growth stocks. Strong performance of small caps over large caps would also benefit India equities.