BNP Paribas is overweight on China and India within Asia. It maintains its earlier year-end target of 29,000 for S&P BSE Sensex, as overweight position about India has been coming off since valuation looks a bit stretched and some Asian peers look attractively priced.

Cyclicals — the favourite

Amid expectations of a deflationary scenario globally and peaking out of the US dollar, BNP Paribas prefers less leveraged companies, cash generators and cash distributors across Asia. Sectorally, BNP prefers to have quality cyclical in its model portfolio for Asia.

Within that it is looking at companies from sectors, such as building materials and chemical manufacturers. “Indian companies form 25-30 per cent of the basket of such quality cyclical companies,” said Manishi Raychaudhury, Asian Equity Strategist at BNP Paribas.

Growth visibility

“Long-term story is intact as domestic consumption and investment is slowly picking up and IIP growth seems to be recovering,” said Raychaudhury.

Richard Iley, Chief Economist — Emerging Markets, BNP Paribas, sees India’s increasingly superior fundamentals, vis-a-vis other major EMs, improving further subject to good monsoons and government reforms. “Private capex, which is almost nil currently, would provide an additional boost to India’s gross domestic product and an 8 per cent plus growth rate is not impossible if that happens,” he said.

BNP Paribas believes that the worst for corporate performance has passed and the first string of results recently has been better than expected. He expects things to improve from the second half of FY17, aided by government led infrastructure projects and uptick in rural consumption.

India has 13 per cent weightage in BNP’s model portfolio and includes stocks such as ITC, L&T, Power Grid, IndusInd Bank, Axis Bank, HDFC Bank, Infosys, Tech Mahindra, TCS, ACC and Grasim Industries.

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Published on April 21, 2016