Analysts are increasingly finding it challenging to recommend stocks to buy in India’s thriving $5 trillion equity market. Currently, only 61 stocks on the NSE Nifty 200 index are rated as ‘buy,’ marking the lowest number in a decade. This trend reflects a growing concern among analysts regarding overvalued stocks, as many have been upgraded to ‘hold’ ratings due to a dimmer outlook for corporate earnings. The shift in sentiment comes as the market enters its ninth year of a rally, raising questions about the sustainability of further gains. The current landscape reveals a stark contrast to the past, where a healthy mix of buy and hold ratings was common.
Buy Calls Are Gradually 2024
The high valuations of many stocks have prompted investors to re-evaluate their positions, leading to a preference for larger, more reasonably valued companies. As earnings growth slows, the market is seeing a rotation towards sectors that may offer better value, particularly in the financial space, which has lagged behind the broader market trends. In this context, the diminishing number of buy calls signifies a cautious approach among market analysts and investors alike. With the Nifty 200 index trading at a valuation approximately 24 times its forward earnings estimates—well above the previous decade’s average—many are questioning whether the current levels can be maintained.