Standard Chartered 'Overweight' On India's Blue Chips Despite Valuation Woes—Here's why

Standard Chartered Bank is overweight on India and particularly finds comfort in large-cap stocks despite the valuation concerns in the domestic stock market, according to its senior investment strategist.

The structural growth story that India has seen in the past year will continue to drive markets higher, Fook Hien Yap told NDTV Profit in an interview. "Valuations are always a concern, but in a world where interest rates a being cut, we are slightly less concerned about valuations."

The investment strategist finds more comfort in large-cap stocks in India as they have a better buffer in terms of security. India remains the most expensive emerging market with current price-to-earnings pegged at 24.5.

Meanwhile, in China, there is high anticipation going into the weekend with the country’s finance minister said to announce as much as 2 trillion yuan ($283 billion) in fresh fiscal stimulus to shore up the economy.

"The price conference by the minister of finance is going to be a good one," according to Yap. The NDRC conference earlier in the week disappointed the markers with a lack of details on fiscal stimulus, he said.

There is expectations on what's coming next, Yap said. "We have a base scenario for Hang Seng to be around 20,000 - 22,500. If we do get fiscal stimulus larger than expected, it could be more up to 24,000 depending on the package."

In the US, the senior investment strategist sees two more cuts this year and four more by next September. "But the trajectory is going to depend on data that comes out later."

This comes in after the world's largest economy clocked in higher-than-expected inflation in September. The core consumer price index—which excludes food and energy costs—increased 0.3% for a second month, more than forecasted in September. The core CPI rose to 3.3% compared to the previous year versus the estimated 3.2%, stalling the Fed's inflation progress.