"India is the second most expensive market in Asia after China. However, unlike China, its momentum has deteriorated rather than improved from October," global financial service major Citigroup said in a research report.
Citigroup said November was a turbulent month for Asian markets with MSCI AC Asia Pacific index ending down 8.39 per cent. All constituents of this index, except Indonesia, generated negative returns in the period under review. Japan is not a part of this index.
The monthly report reveals that India's earning sentiment had turned negative last month, though its price momentum is still going strong. "India is supported by strong momentum in expectation of its strong economic growth," the report said.
Rising stock prices make the market more expensive, but it also implies improving long-term price momentum and all else being equal, stronger momentum characteristics, it added.
Last month, the benchmark Sensex had witnessed global pressure and the index lost 361.16 points in the period.
The index ended at 19,363.19 points after falling to a low of 18,182.83 in November, as investors turned cautious after Foreign Institutional Investors (FIIs) pulled out sizable funds from equity.
The FIIs sold as much as Rs 5,849.90 crore (Rs 58.49 billion) in equities during November, while the overall investment by the foreign investors so far this year has been Rs 65,907.30 crore (Rs 659.07 billion).
Besides, China continues to be the market with the best momentum and worst valuation, with no signs of momentum weakening.
It has showed signs of improvement in its valuation metric and momentum. Both earnings revision and price momentum still remain strong, the report said.
The Citigroup research is based on the valuation and momentum of stocks. Factors which impact the valuation of stocks include earnings growth, market capitalisation and cost of debt.
Besides, momentum in a stock is measured in two ways - price momentum and earnings estimate revisions.
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