Nov 29 (Reuters) – Societe Generale on Wednesday downgraded Indian equities to “neutral” from “overweight” forward of elections subsequent yr on expectations of “moderating” financial development and bettering dangers for broader rising market shares.

India’s benchmark, Nifty 50 index (.NSEI), is up 11% to date this yr, in contrast with roughly 3% year-to-date development for the MSCI Emerging Markets index (.dMIEF00000PUS).

“Indian equities have been defensive over the past year due to the country’s resilient economic growth, low asset volatility and sticky domestic flows,” the European brokerage famous.

It added that with the greenback and U.S. Treasury yields softening, danger sentiments for the broader rising market shares at the moment are bettering.

This, coupled with the final elections in India subsequent yr, might weigh on danger sentiments on Indian shares, SocGen stated.

SocGen strategists, led by Frank Benzimra, count on Indian firms’ revenue development to stay resilient and develop by 15% subsequent yr, with elevated contribution coming from exporters just like the expertise sector. However, they count on the expansion to be decrease in comparison with most east Asian markets.

In Southeast Asia, Benzimra downgraded Indonesian shares to “underweight” from “neutral” as earnings development are among the many weakest in Asia and on uncertainty surrounding election outcomes.

For the broader area, Benzimra stated U.S. monetary situations ought to now be “somewhat” extra beneficial to rising Asian equities, however much less beneficial to Japanese shares.

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