Desai highlights in his remarks that the trailing 12-month performance of the market is nearly the worst in history and relative valuations are now at previous troughs.
He also went on to add that India’s share in profits exceeded its index weight by the highest margin ever and that the Sensex is nearly at the cheapest ever in gold terms.Positioning of FPIs has only weakened in the last several months, with the new series also beginning at significantly high short positions from them.
“At the same time, it seems earnings up cycle has resumed, with high frequency data showing strength, except for some scattered conflict-related weakness in March,” Desai wrote, adding that the Reserve Bank of India has turned the sentiments on the currency, which remains undervalued.
Apart from geopolitical developments, the other most important trigger for Indian equities is the earnings season for the quarter, which begins today, with TCS reporting its results for the March quarter, along with broader market names like GM Breweries and Anand Rathi Wealth.
