Reuters Market Eye - While MSCI India has already outperformed MSCI Asia ex-Japan by 3.2 percent since it became one of the cheapest four markets in the region in early March, Credit Suisse says there is still room for more outperformance.
The investment bank says that since 2000, whenever India became one of the cheapest four markets in MSCI Asia Ex-Japan region, it has outperformed in 14 of 15 times, and that on average the outperformance has been 12.4 percent.
Credit Suisse argues that not only does India look cheap relative to the region, but even on an absolute basis, the current price-to-book of 2.02 times is close to the last 3 troughs of 1.95 times.
"We believe potential rate cuts are the catalyst.... CS India strategist suggesting potentially further 10 percent upside," said Credit Suisse in a report on Wednesday.
The bank highlights over-ownership among foreign investors, earnings downgrades and elections as key risks.
(Reporting by Abhishek Vishnoi)