The investment case for India really has always been a continuing structurally positive one, since the country has the best growth potential in both economic terms and in underlying corporate earnings compared to all major markets, said Goldman Sachs' Chief Asia Pacific Strategist Timothy Moe...

For the year 2024, the investment bank said their base case for Nifty is 21,800, upgrading India to an ‘overweight’ rating.

Goldman Sachs downgraded their view on India a year ago, because the frontline indices were trading at nearly 24x forward earnings, which seemed expensive. A lot of ‘good news’ has been factored into the valuation, so the investment bank reduced its long-standing ‘overweight’ call down to ‘market’ weight, said Moe.

However, for FY23, the underlying corporate earnings grew about 17 percent while Nifty is up nine percent during the same time. Therefore, there has been some narrowing of the valuation, as the PE ratio has come down from 24x to around 20x. “Currently that still is on the expensive side but not as expensive and, accordingly, we think it gives us an opportunity to lean back into the long-term strategically positive stance,” added Moe.