More earnings cut could be in the offing, warns Sunil Tirumalai of UBS

Since the announcement of stimulus in China, India has underperformed EM by ~7%. Despite the underperformance India still screens expensive (down to 70% premium to EM – vs 10 year average of 35%). Of course – this misses the fact that the growth profile for Indian stocks has weakened recently. Seen differently, for the same fundamentals and growth, Indian stocks demand 90% higher valuations. We can become constructive on Indian equities at slightly better valuation levels.