The Indian market is attractive but compared to Asian peers, especially China, there is a disadvantage, according to Manpreet Gill, senior investment strategist at Standard Chartered Bank. The reason? valuations.

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“When it comes to Indian markets, our view is, from a regional perspective, a bit more neutral. I mean, (we were) overweight on India last year but today we are looking from a relative perspective, at least more than outperformance relative Asia potentially coming from markets like China, where valuations are far more bombed out,” said Gill.

He noted that even though the headline inflation numbers are quite high, some of the factors behind inflation are starting to slow down.

“We are getting a bit of a bifurcation across different major regions. The headline numbers, of course, are still quite high. We have seen that in the US and Europe, for example, but we are beginning to get a bit of less bad news on the core inflation side, where some of the supply chains, used cars, for example, some of that pressure on inflation is beginning to slow and that’s the good news,” said Gill.

He said that he is looking at sectors where valuations are beaten up. He highlighted that valuations are far more compressed in China.

Also Read: From SBI's Dinesh Khara to Nomura's Sonal Varma: Who said what on India's 17-month high retail inflation

Gill stressed that margin will be key in Q1 as commodity costs could take a toll on margins. “Q1 earnings around the world, in most markets, are now almost looking to be the next big trigger and what is interesting here is that margins will really turn out to be key. So without getting into individual companies, margins will be the big market focus because if anything higher inflation is positive for revenue, the nominal earnings may go up, but we are in an environment where there like to be some worries about costs numbers, some worries for what that means for margin. So whether that's in India or in the US or in other major markets, that is going to be the main focus and that is holding some consensus expectations back,” he said.

Watch the video for the full interview.

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First Published:Apr 18, 2022 9:10 AM IST