'Just 21% Since 1996': CLSA Report Says India Is 'Exiting Rare Episode Of Earnings Surprise'

Investment firm CLSA, in its latest report, has said that the Indian equity markets are 'exiting a rare episode of earnings surprise'. Noting that D-Street players delivered EPS growth superior to consensus expectations of sell-side analysts made 12 months prior, the CLSA report by Alexander Redman noted that the phenomenon does not happen often and has occurred 'just 21% of the time since 1996'.

As cited earlier by Republic Business, the same report also cites CLSA's tactical allocation in early October, returning to a benchmark on China and a 20% overweight on India in light of the slated return of Donald Trump as US President. 

India One Of The Few Emerging Markets Where…: CLSA Report On India Earnings

Highlighting aspects that may work well for Indian equities in the near-term future, the report further said that India is one of the few emerging markets where a relationship between corporate earnings growth and the changes in the pace of economic output holds true, attributable to the country’s more domestically oriented equity market.

"Given recent years’ rupee stability and the acceleration in local currency earnings, the trend progression in dollarized EPS for India has regained the 30-year trend line having been flat for the decade to 2020," the report notes.

Faithful Association Between Mutual Fund Flows And Nifty: CLSA

Noting the strong inflow of SIPs in the markets, the CLSA report further added that the Indian equities are 83% domestically owned, the highest such proportion across emerging markets.

"Given the high domestic equity ownership, there is an especially faithful association between Indian mutual fund flows and NIFTY 50 index momentum," the report noted.