Indian equities are expensive even after the worst start to the year since 2011 for the most accurate forecaster for the nation’s benchmark stock index. The reason: earnings, Bloomberg reported. Company earnings will grow 12% in 2016, slower than the “very optimistic” 18.5% forecast by analysts, Devendra Joshi, Asia equity strategist at HSBC Holdings Plc, said in a phone interview from Hong Kong. The S&P BSE Sensex ended 2015 within 1% of his year-end target of 25,800, the closest call among the gauge’s forecasters. The Sensex, which tumbled into a bear market last month, is still valued at a 47% premium over a gauge of emerging markets. The valuation may not sustain as a recovery in corporate profitability is taking longer than expected, Joshi said. Net incomes at the 30 index members have declined in four of the last five quarters, according data compiled by Bloomberg. The declining streak is the worst since 2008 when profits fell for six straight quarters amid the global financial crisis, the data show.
