New Delhi: Global brokerage Credit Suisse is "underweight" on Indian equities in an Asia Pacific context, as the domestic equity market's premium has risen to the highest level.


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The global financial services major in its strategy report said the MSCI India index has fallen by the least as against Indonesia and the Philippines.


According to the report, India fell just 9.9 percent from the highs versus falls of 19 percent for both MSCI Indonesia and MSCI Philippines.


"With continued downgrades to consensus EPS and weak ROE, India's premium on our P/B vs ROE valuation model has now risen to 64 percent close to its highest ever," Credit Suisse Research Analysts Sakthi Siva and Kin Nang Chik said in the note.


Credit Suisse reiterated its underweight call on India in an Asia Pacific context.


The brokerage believes overvalued markets could stay overvalued for longer than expected especially if the US-China trade war escalates, but cautioned that India could be the next shoe to drop.


"We believe the current combination ? close to highest ever premiums versus the region, four consecutive years of downgrades to consensus EPS, current account deficit, rising oil prices further pressuring the current account and fiscal deficits and the fact that foreign investors have yet to capitulate suggest India could be the next shoe to drop," the report noted.


The BSE benchmark Sensex is hovering around 35,300 points. It has gained 3.65 percent so far this year.