Standard Chartered recommends buying Indian stocks on dips

Standard Chartered has improved its outlook for the Indian stock market despite expecting ongoing volatility. The firm suggests that investors should buy stocks when prices dip. They particularly favor large-cap stocks because of their stability but also see potential in small-cap stocks. The Indian stock market has shown signs of recovery this month after a tough five months. However, Standard Chartered warns that market fluctuations may continue as investors adapt to changing conditions. The brokerage believes that over the next year, the risks and rewards of domestic equities look more favorable, driven by better valuations and potential growth. Standard Chartered is focusing on large-cap equities due to their strong financial health and attractive prices. They also see small-caps benefiting from a recovering economy. The firm is bullish on medium- and long-term bonds over cash, primarily due to easing inflation and expectations of interest rate cuts by the Reserve Bank of India. Gold remains an essential investment for protecting against market uncertainty. According to Standard Chartered, various factors contribute to their positive view on Indian equities. They noted a GDP growth of 6.2% in Q3FY25, a recovery from earlier lows, and an improvement in corporate earnings. The firm's analysis shows that the current price-to-earnings ratio for the Nifty index is reasonable compared to historical averages. They also point out that the Reserve Bank of India's recent policies indicate a supportive financial environment that could lead to lower bond yields. Moreover, Standard Chartered sees signs that the stock market may be reaching a bottom. A large number of stocks are currently below key moving averages, which has historically indicated potential market recovery points. The brokerage has a positive stance on financial and consumer discretionary sectors, expecting growth in these areas. While they upgrade consumer stocks due to anticipated spending increases, they have downgraded industrial stocks due to concerns about potential growth slowdowns. Investors are advised to consult experts before making investment decisions.