Citi upgrades Indian stocks to 'overweight' on rate cut prospects, limited trade impact
India's "domestic-oriented economy" keeps it more shielded from increased exposure to the U.S. or China, the brokerage said, while keeping a "neutral" rating on broader emerging markets stocks.
The Wall Street brokerage said it expects India's personal income tax rate cuts, announced earlier this month, to boost consumption.
The government's plan to spend a record 11.21 trillion rupees ($129.54 billion) on infrastructure in the financial year that starts in April is also expected to aid economic growth and create more jobs, Citi said.
It expects the Reserve Bank of India to continue its monetary policy easing cycle, expecting an additional 50 basis points of reductions this year, which could further lift local stocks.
Citi previously forecast the benchmark Nifty 50 touching 26,000 levels by December, a 15% rise from Monday's close, and retained its projection for the benchmark MSCI EM equities index at 1,170 by end-2025, a 2% dip from its last close.
Indian equities have been under selling pressure for most of February. The Nifty 50 has fallen in 15 of 17 trading sessions this month, losing more than 4%, on persistent foreign outflows, uncertainty about U.S. tariffs, and concerns over slowing domestic growth.
On the Latam front, the brokerage lifted its rating on Chilean stocks to "overweight" from "neutral", citing potential growth in earnings-per-share.
The brokerage lowered its rating on Saudi Arabia to "neutral" from "overweight" and reduced ASEAN equities to "underweight" from "neutral".
(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Sonia Cheema)
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