The global investment banking major Goldman Sachs in its report said that a sluggish domestic and global growth outlook would have a bearing on the Indian equities in the coming months.
"We find that the Indian stock market does not present an attractive risk/reward entry point currently as macro headwinds are likely to persist in the near-term," it said.
The report titled 'India: Fade short-lived rally, not too late to underweight Portfolio' focuses on the performance and future outlook for National Stock Exchange's 50-share benchmark Nifty index.
Goldman Sachs said that continued weak domestic growth in the next 3-6 months as well as a poor global growth environment would weigh on Nifty, which has been seeing bearish trends in recent months.
This index, according to Goldman Sachs, is the "most exposed market in Asia to a 'muddle-through' environment through liquidity and foreign corporate debt linkages".
"Poor Nifty performance has been attributable in part to a gridlocked political landscape, plagued by project delays and lack of reforms. "While we agree that the political headlines have created uncertainty in the market, the main impact to the market is through the investment channel in our view," the report said.