Latest news with #SunilTirumalai
Mint
27-05-2025
- Business
- Mint
UBS flags India's high-risk premium despite recent equities upgrade
Given that corporate earnings growth in India has been stable, the exorbitant risk premium—extra returns that investors expect from riskier assets—linked to Indian equities is unreasonable, global brokerage UBS Securities said. India traditionally carried a 20-25% risk premium versus other emerging markets. However, recently, that premium has soared to 60%, a level unjustified by the current pace of corporate earnings growth, Sunil Tirumalai, head of Emerging Markets and Asia Equity Strategy at UBS Securities, said during a virtual media briefing on Tuesday. Indian equities often carry a high risk premium, driven by their long-term growth story and the appeal of a young, consumption-led economy. But alongside this optimism come challenges like policy uncertainty, market volatility and currency risks that make investors demand extra returns. The premium reflects both optimism about India's future and the risks tied to it. Also read: Global stock markets not pricing in severe downturn just yet: Nomura's Karkhanis In late April, UBS Securities tactically changed their equity strategy for emerging markets to domestic and defensive-oriented sectors in view of global trade tensions, while upgrading stance on India to neutral from underweight. However, a stronger case to invest in India will likely emerge when corporate earnings growth picks up, manufacturing gains traction and US-India trade negotiations reach a breakthrough, Tirumalai said during the briefing ahead of the UBS Asian Investment Conference in Hong Kong. From September 2024 to May 2025, the Nifty 50 and the Nifty Midcap 150 indices went through a full peak-to-trough-to-rebound cycle—correcting 16% and 21%, then recovering 13–17% from their February and March 2025 lows, respectively, highlighted a 22 May report by Elara Capital. Yet, the market that has emerged looking fundamentally different, it read. 'The drawdowns were valuation-led and broad-based; the rebound has been rotational, earnings-supported on a selective basis, and anchored in lower-multiple segments." Meanwhile, even foreign inflows into India seem to be back as India is seen as a relative safe haven. Also read: PTC Industries: How high can the stock really go? 'FIIs turned positive on most of the emerging markets as news flow on trade and tariffs improved," said a report by BNP Paribas dated 14 May. Markets have reacted positively to the tariff pause, US-UK trade deal and rollback of recent tariffs between the US and China, the report said. Analysts suggested that a clearer global tariff outlook was essential for the return of FII flows. Over the past month, many believe that uncertainty surrounding tariffs has eased. As a result, Foreign Institutional Investors (FIIs) have purchased Indian equities worth $6.1 billion over the 16 trading sessions leading up to 8 May. According to a report by BNP Paribas, FII ownership in Indian markets, which had been on a downward trend for several years, has stabilized since February 2025. Net FPI investments in Indian equities turned positive in April, with inflows of ₹4,223 crore, following three straight months of outflows— ₹78,027 crore in January, ₹34,574 crore in February, and ₹3,973 crore in March. So far in May (up to the 26 May), FPIs have made net purchases totaling ₹14,429 crore, according to data from NSDL. Tirumalai said that when the dollar softens, emerging markets usually gain, adding that he expects the greenback to stay weak through the rest of 2025. Also read: This fertilizer stock rose 88% in a year. Will MSCI entry trigger further rally? A weak dollar makes emerging market assets like Indian equities more attractive to foreign investors, as their returns improve in dollar terms. It also eases funding conditions globally, encouraging capital flows into higher-yielding markets. In 2025 so far, MSCI EM has gained nearly 9% while MSCI India is up 3.4%. UBS Securities continues to favour China for now, citing its attractive valuations and comparatively stronger fundamentals. Meanwhile, J.P. Morgan noted that Chinese equities have recovered most of the losses since US President Donald Trump's 2 April "Liberation Day" tariffs announced to curb imports, like the rest of the world, but have lagged the performance of the EM benchmark, as well as the developed market benchmark. Within the emerging market pack, Chinese equities were the worst hit in the post-Liberation Day sharp de-risking, down 13% in less than a week, the 19 May report highlighted. 'We recognize that 90 days may not be enough for the US and China to deliver a trade agreement, and the tariffs noise is unlikely to go away, but we do not expect the US to again adopt an aggressive trade stance towards China, which could allow EM equities to trade better," said J.P. Morgan analysts in their equity strategy report, while upgrading their stance on emerging markets to neutral from underweight.
CNBC
28-04-2025
- Business
- CNBC
UBS says India's downside ‘contained', but China still offers better risk-reward
UBS Investment Bank has upgraded Indian equities to 'Neutral' from 'Underweight,' citing a more defensive profile amid global trade tensions. Head of EM and Asia Equity Strategy Sunil Tirumalai said the downside risk for India is more "contained" compared to more tech-exposed markets like Korea and Taiwan, but still has a less compelling risk-reward profile than China.
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Business Standard
25-04-2025
- Business
- Business Standard
Stock Market LIVE Updates: GIFT Nifty signals gap-up open for India mkts; RIL, Maruti Suzuki Q4 eyed
Live Blog 8:53 AM Stock Market LIVE Updates: UBS drops long-held bearish view on Indian market, downgrades Hong Kong Stock Market LIVE Updates: UBS Group AG has shifted its stance on Indian stocks, moving from a bearish outlook to a neutral position as it adjusts its strategy amid global trade uncertainties. Strategists, including Sunil Tirumalai, noted in a Thursday report that the brokerage is increasingly optimistic about the South Asian market, driven by rising demand for defensive and domestically-focused stocks. READ MORE 8:47 AM Stock Market LIVE Updates: Equity mutual funds lag on risk-adjusted basis during five-year period Stock Market LIVE Updates: Over the five-year period from 2020 to 2025, one in three equity mutual fund (MF) schemes has outperformed its benchmark on a risk-adjusted basis, as indicated by their information ratios (IRs)—a performance metric that fund houses have only recently begun publishing. The IR assesses how efficiently an investment manager generates excess returns relative to a benchmark while accounting for the risk taken. Typically, IR values range from -1.5 to 1.5, with higher numbers reflecting stronger fund manager performance. READ MORE 8:38 AM Stock Market LIVE Updates: Private investment in India remains sluggish, particularly in sectors vital for enhancing the economy's productivity, such as manufacturing and machinery, said Krishna Srinivasan, director of the Asia and Pacific department at the International Monetary Fund (IMF), during a press conference. 'We are concerned about private investment, which continues to be lackluster… For India to achieve its goal of becoming a developed economy by 2047, private investment must gather stronger momentum,' Srinivasan emphasised. On Tuesday, the IMF lowered its FY26 growth forecast for India by 30 basis points to 6.2 per cent, attributing the revision to rising trade tensions and global economic uncertainty in its latest World Economic Outlook. READ MORE 8:27 AM Stock Market LIVE Updates: Expect India to strike first trade pact: US Treasury Secy Scott Bessent 8:13 AM Stock Market LIVE Updates: Nifty may stay 23,700-24,600 range next week: What's best trading strategy? 8:05 AM Stock Market LIVE Updates: Trade set-up, April 25: Nifty strategy amid RIL, Maruti Q4, Pahalgam news Stock Market LIVE Updates: India's stock markets today may navigate a mix of buoyant global sentiment and rising bilateral tensions between India and Pakistan following the Pahalgam terror attack. As of 7:15 AM, GIFT Nifty futures were up 154 points, trading at 24,528. On Thursday, markets ended their seven-day winning streak, closing lower. Profit booking in Indian equities occurred even as foreign institutional investors (FIIs) made their largest stock purchases since March 27. On April 24, FIIs/FPIs acquired shares worth ₹8,250.5 crore, while domestic institutional investors (DIIs) recorded net sales of ₹534.5 crore. 7:57 AM Stock Market LIVE Updates: Asia Pacific markets climb Stock Market LIVE Updates: Markets in the Asia-Pacific region were higher. Japan's Nikkei 225 was higher by 1.43 per cent, and Topix had climbed 1.12 per cent. South Korea's Kospi was ahead by 0.69 per cent, and the smallcap Kosdaq was higher by 0.50 per cent. Hong Kong's Hang Seng index was ahead by 0.84 per cent, while mainland China's CSI 300 was higher by 0.47 per cent. Australian markets are closed today for Anzac Day holiday. 7:49 AM Stock Market LIVE Updates: Wall Street closes higher Stock Market LIVE Updates: US stocks closed higher in the previous session. The S&P 500 gained 2.03 per cent to close at 5,484.77, the tech-heavy Nasdaq Composite added 2.74 per cent to finish at 17,166.04, and the Dow Jones climbed 1.23 per cent to end at 40,093.40. Futures linked to the S&P 500 were 0.37 per cent higher, while Nasdaq-100 futures gained 0.49 per cent. However, Dow Jones futures were around the flatline, down 0.03 per cent. First Published: Apr 25 2025 | 7:44 AM IST
Hans India
25-04-2025
- Business
- Hans India
UBS upgrades India's rating to neutral
New Delhi: Global brokerage firm UBS Group AG has upgraded India to 'Neutral' from its earlier 'Underweight' tag, in its revised equity strategy for emerging markets, following the uncertainties in international trade triggered by the dramatic tariff hikes announced by US President Donald Trump. UBS acknowledged India's strengths, noting its strong domestic-focused toplines, resilience in earnings per share (EPS) even during adverse conditions, and potential advantages from declining oil prices. Additional tailwinds for the Indian economy include the growing willingness of banks to lower deposit rates, despite sluggish deposit growth, and possible government measures to boost consumption. Global brokerage is becoming more optimistic about the Indian market amid a growing preference for defensive and domestically-oriented shares, UBS strategists, including Sunil Tirumalai, wrote in a note released on Thursday.
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Business Standard
24-04-2025
- Business
- Business Standard
UBS drops long-held bearish view on Indian market, downgrades Hong Kong
UBS Group AG is abandoning its long-held bearish view on Indian stocks, upgrading the market to neutral from underweight as it realigns its strategy given global trade uncertainties. The brokerage is becoming more optimistic on the South Asian market amid a growing preference for defensive and domestically-oriented shares, strategists including Sunil Tirumalai wrote in a note dated Thursday. 'While valuations still look expensive relative to ordinary fundamental performance of companies, India screens as defensive amidst trade uncertainty given its domestic focused economy, while benefiting from lower crude oil prices,' the analysts wrote. The upgrade comes as global investors refocus on Indian assets as a relative safe haven in the wake of US President Donald Trump's tariff war, with local stock benchmarks quickly recouping losses since the April 2 announcement of levies. Indian banks' willingness to cut deposit rates despite weak deposit growth and the potential of government support for consumption have been factors for the upgrade, UBS analysts added. Meanwhile, UBS downgraded Hong Kong stocks to neutral from overweight as the tariff risk could dampen sentiment given the market's relatively high trade dependence and index exposure to US revenues. The brokerage also upgraded Indonesia to overweight from neutral, given its domestic and defensive qualities 'with valuations now close to Covid lows' and potential support from state-owned funds. To be sure, the strategists haven't gone overweight in India as stock fundamentals 'are still lacklustre' and it's unclear whether government focus is returning to growth or investments anytime soon. It's also 'hard to conclude India is a winner in supply chain shifts,' they wrote, adding that China still looks more attractive than India from a risk-reward perspective. Tirumalai's team has held an underweight rating on India since 2022. In April last year, they upgraded Chinese stocks to overweight, citing a promising earnings outlook and potentially higher participation by domestic investors. ©2025 Bloomberg L.P.
