JPMorgan forsees bright side of Indian stocks, advises taking benefit of volatility ahead elections

During the weeks-long election, investors should take advantage of any fluctuations in Indian stocks as a chance to purchase, advises JPMorgan Chase & Co.’s private banking division. With votes to be tabulated on June 4, the South Asian country, which has been a favored choice among investors avoiding China, is scheduled to begin statewide polls this Friday.

It is largely anticipated that the Bharatiya Janata Party, led by Prime Minister Narendra Modi, will win a third term, which will support his administration’s continued emphasis on infrastructural modernization and manufacturing growth.

“We remain convinced of the structural growth opportunity in Indian equities,” Alexander Wolf, head of Asia investment strategy at JPMorgan Private Bank wrote in a note. “Long-term investors could be at least ‘neutral’ relative to the benchmark, and a strategic ‘overweight’ is warranted in our view.”

India’s $4.5 trillion stock market is now among the most expensive in the world thanks to the incredible surge.

In spite of the fact that India emerged from a recent Bloomberg survey as the most sought-after investment destination in Asia—beating out more established markets like China and Japan—the stretched valuation has forced some global asset managers to decrease their allocations to the nation.

Indian equities are “not attractive valuation-wise but they also do not appear euphoric at the moment,” Wolf added. “For countries with high future growth potential and a track record of impressive earnings, a higher multiple makes sense.”