New Delhi: India's outperformance of other emerging markets is at previous peaks and such periods are usually followed by the country's underperformance, Jefferies has said in a report.
While India is viewed to be a beneficiary of the China turmoil, India's Nifty has already outperformed emerging markets benchmarks by 19-33ppts on 3/6/12m basis. From such levels, Nifty performance has been weak historically. Also, over the last 6 months, India has received only $1.5 billion of net inflow from foreigners despite the China problems. We see rising equity supply & peak valuations as risks, Jefferies said.
Nifty has outperformed the EM benchmarks by 19ppt/22ppt/33ppt on a 90 day/180 day/365-day basis. Our long-term daily rolling analysis suggests that such periods of outperformance are unlikely to significantly extend beyond the current levels, Jefferies said. Also, such periods of outperformance, are usually followed by India underperforming by 11ppt, 6ppt, and 7ppt on average in the following 90, 180, and 365 days respectively.