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Indian markets climb to new high on better-than-estimated corporate earnings

India’s S&P BSE Sensex Index reached an all-time high on November 5 on the back of reports of better-than-estimated corporate earnings.

According to data compiled by Bloomberg, more than three-quarters of companies trading on the Sensex, which have so far reported their earnings, have either matched or beaten their estimates.

Stocks also rose on speculation that the central bank may reduce interest rates as lower energy costs cool inflation in a country that buys almost 80 percent of its oil from abroad.

We believe that “the Sensex still has room to rise higher,” says Christine Tan, Portfolio Manager with Excel Funds Management Inc. “India’s stock market is still trading at below 2008 levels in spite of increases in corporate earnings and we expect that it will eventually return to 2008 multiples, resulting in strong returns for investors.”

Excel anticipates that corporate earnings will grow at 16-18% over the next two years and that the equity markets will mirror the earnings growth, even without any resulting valuations re-rating.

Source: The Excel Investment Counsel

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