Nov. 5 (Bloomberg) -- Indian stocks, Asia’s second-worst performers in the past month, entered “attractive territory” after the retreat from this year’s high, according to Nomura Holdings Inc.

Indiabulls Real Estate Ltd., Glenmark Pharmaceuticals Ltd. and HCL Technologies Ltd. are among the stocks that offer the best “buying opportunity” following the decline, Nomura analysts Prabhat Awasthi, Nipun Prem and Sanjay Kadam wrote in a report dated yesterday. The market is now trading at about 15.3 times estimated earnings, compared with its three-year average of 15.4 times, while earnings yield relative to the nominal 10- year government bond yield also appear favorable, they added.

The benchmark Bombay Stock Exchange Sensitive Index fell 1.4 percent as of 10:30 a.m. local time today, taking its slump from this year’s high to 9.5 percent. Shares have retreated amid concern accelerating inflation will prompt the central bank to raise interest rates and as companies including Hindalco Industries Ltd. reported declines in profits.

“Market valuations have now moved from being fairly valued -- in the context of continuing build-up of industrial momentum and an economic growth rate that is among the highest in the world amidst the currently anemic global economic landscape -- into attractive territory,” the analysts said.

Sensex’s Gain

The Sensex, as the benchmark index is known, may rise 18 percent from yesterday’s close, based on Nomura’s September 2010 target of 18,800, according to the report. The gauge fell 6.8 percent in the past month, the worst performance in Asia after Sri Lanka’s benchmark measure’s 7.2 percent decline, according to data compiled by Bloomberg.

Benchmark indexes in India as well as China may rise between 20 percent and 25 percent next year, Prudential International Investments Advisers LLC’s chief investment strategist John Praveen said this week. He favors the Indian market for its “strong” domestic demand.

BNP Paribas today also predicted that the Sensex may rise to 21,000 by the end of 2010, according to a report by analysts Manishi Raychaudhuri and Anando Maitra.

Indiabulls Real Estate, a developer, offers “potential upside” of 40 percent, Nomura said, citing its share-price estimate for the stock. A recovering economy may spur leasing activity in the company’s central Mumbai office space, while the sale of apartments in the Indian city will also boost its cash flows, the analysts added.

Glenmark, an Indian drugmaker, and HCL Technologies, the software-services provider controlled by billionaire Shiv Nadar, may both gain 38 percent, they also said.

To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net.

Last Updated: November 5, 2009 00:41 EST