Goldman Sachs upgrades outlook for Indian stocks after 15 months

NEW DELHI: Global financial services provider Goldman Sachs has upgraded its outlook on Indian stocks, saying the country's equity market would
be in line with the overall Asian landscape as against its previous projection of under-performance.

"We are raising our long-standing underweight stance on India to market weight, because we believe that India's investment merits relative to other regional alternatives have improved," Goldman Sachs said in a latest report.

The global financial services firm has raised India's stock rating to 'market weight', the first upgrade, since it was rated 'underweight' in January 2008.

It further said that the key reasons for taking a more constructive view revolve around domestic demand, corporate profitability and stock valuation.

The report said that the financing constraints that hurt Indian corporate profitability during the global credit crisis in the fourth quarter of 2008 have eased and so the country's relative economic resilience has improved.

"While India's corporate profit growth was hit in 4Q08 (fourth quarter of 2008) and will remain under pressure in early 2009, we expect relatively better profitability and EPS (earning per share) growth than in most other markets," it added.