(Bloomberg) -- Indian equities are gaining an edge in Asia as stronger earnings and a nascent return of foreign investors bolster the case for further outperformance.
Profits at roughly two-thirds of BSE 100 companies that have reported results rose 20% from a year earlier in the September quarter, according to Citigroup Inc. That was the fastest growth in at least five quarters and beat estimates, the brokerage said. Consumer staples, steel and financials were among sectors to see earnings upgrades.
The improvement is putting India’s $5.1 trillion market back on investors’ radar after rich valuations, record foreign outflows and limited exposure to the artificial-intelligence trade soured sentiment. Since Oct. 1, the Nifty 50 has risen 6% through Wednesday, even as the MSCI Asia Pacific Index fell 7.5%.
Some strategists see scope for the run of outperformance to extend if earnings upgrades broaden and overseas inflows accelerate.
Earnings have been “reasonably good” at a time when valuations have become less demanding, making India a “pocket of resilience” in the region, said Rajat Agarwal, an Asia strategist at Societe Generale SA.