Valuations, global growth risks keeping BofA cautious on India stocks near term

BofA Global Research cautious on Indian equities for the near term on concerns over valuations and global growth risks

"Valuations seem full and markets are ignoring risks of likely slowing global growth," the brokerage said in a report

However, it remained optimistic on India's long-term prospects

Sees confluence of nine structural drivers, including rapid infrastructure build-out, productivity gains, digitization, and financialization, to position India for "sustained strong economic and corporate earnings growth"

Household savings resilience, discretionary consumption, formalization, current account deficit to potential surplus, and decarbonization are other themes highlighted by BofA

Brokerage notes that the Indian market returned CAGR 7% over the past three decades in dollar terms, which is second-best globally after the U.S.

Says growth drove a large share of stock returns in India rather than valuation expansion

Nifty 50 .NSEI up 0.2% on the day at 24,791, takes YTD gains to ~5%