>INDIA STRATEGY (KOTAK SECURITIES)

Time for a good break. We see very little value in most large cap. Indian stocks and do not rule out a 15-20% market correction in case of (1) weak monsoons and (2) global economic weakness. Our last tactical move in mid-June 2009 to a defensive portfolio (select PSU banks, consumers, technology) has also played out with those names having run up over the past 4-6 weeks. In our view, the predominance of macro factors and rich valuations across sectors precludes stock picking currently.

• Continue to recommend defensive portfolio but even there valuations are rich
• Minor changes to composite market earnings following 1QFY10 results
• 1QFY10 results better than expected on an ex-energy basis.
• Valuations- little room to grow with most sectors at around 20XFY1010E

To see full report: INDIA STRATEGY