Goldman Sachs Upgrades India on the Back of Narendra Modi as CEO of Govt of India
November 5, 2013
The Sanctity of Highly Paid Equity Research is – It Follows the market and never Leads 🙂 At a time when all the Star Analysts Downgraded India, the market rose very sharpy. And this time around, Goldman Sachs Star Analysts, Timothy Moe, Sunil Koul and Team have upgraded India to MarketWeight from Underweight.
The Report said that there exists optimism in the political front, led by BJP’s prime ministerial candidate Mr. Narendra Modi. External Pressures have moderated according to Goldman and early signs of cyclical pick up and structural improvement.
Goldman Sachs has revised 2014 End Nifty Target to 6900 at a 14.5x forward P/E. They further say that Midrange valuations are not a constraint if fundamentals continue to stabilize.
We do acknowledge that Narendra Modi will not just be the Prime Minister of India but he will be the CEO of Govt of India. Next, going by the Fundamental Analysis, we can positively say with confidence that no more than 60% of the companies in the Index have invested in CAPEX in the past couple of years, so where will be the healthy rise in earnings come from to justify the Index ? We’ll stick to our theory of investing based on Fundamentals and Earnings and leave the speculative action to Punters and Hedge Fund Managers.