>INDIAN INVESTMENT STRATEGY: Play the odds (CLSA)

■ Indian growth has recovered well, led by the industry, services

■ Investment too showing signs of recovery

■ Weak global cues, tightening, equity supply = choppy 1H

■ Valuations near mean; upgrades from 2H10 to drive market

■ Sensex target of 17% to year-end; add into any 1Q weakness

■ Overweight - Industrials, IT, materials

■ Underweight - Autos, energy, utilities and consumer staples

Recovery visible . . . but pause in earnings upgrades

■ Car sales at 34% YoY, IIP consumer durables up 45%.

■ 14/17 components of IIP positive, vs. 5/17 in Dec 09

■ Net hires of 0.5m in Jul-Sep 09, vs. 0.13m jobs lost in Apr-Jun

■ Sensex FY11CL EPS up 17% from low, but flat since Sep 09

■ Upgrades > downgrades, but oil & gas, banks, telcos are drags

■ Investment upturn, global recovery key to upgrade cycle.

To read the full report: INVESTMENT STRATEGY