** Goldman Sachs (GS) lowers investment view to marketweight from overweight, saying it believes risk/reward for Indian equities is less favourable at current levels

** GS expect market volatility to rise heading into the elections and foreign investors to stay on the sidelines until political uncertainty is over

** GS says valuations are stretched for Indian equities and are the most expensive in Asia, trading at a record 58 pct premia to region; At these levels, equities have historically posted negative returns over next 3-6 months


** While micro (earnings) seems to be improving, see multiple macro headwinds for market in near-term on account of moderating sequential growth, tighter financial conditions, rising oil prices, worsening current account deficit and a volatile rupee - Goldman Sachs

** Says Nifty has compounded at 14 pct over the past 5 years while earnings grew at 5 pct; While profit recovery is underway, this micro 'catch up' doesn't warrant further market upside

** Adds a likely increase in govt spending/fiscal deficit before elections and potential event risk of a less stable govt could weigh on markets near-term

** In near term, GS expects markets to consolidate heading into the elections and Nifty to reach its 12-month target of 12,000 as political uncertainty wanes and earnings accrue

** GS upgrades infotech to overweight, pharma to marketweight, retain overweight stance on private banks and marketweight on PSU banks and NBFCs; downgrade industrials and autos to marketweight

** India is due to hold elections in three states this year and a general election, in which current Prime Minister Narendra Modi is widely expected to seek a second term, in less than nine months