Morgan Stanley upgrades Indian markets to 'overweight', predicts 'long wave boom' ahead

Morgan Stanley has upgraded its view on Indian markets, revising them from “equal weight” to “overweight,” and predicting Indian economy to perform better in future.

The investment bank has simultaneously cut down on its rating for China, downgrading it to “equal weight”.

Also read: Morgan Stanley says India transformed in less than a decade

According to a statement released by the brokerage firm, India’s macro indicators look resilient and its economy is on track to achieve the 6.2 per cent growth forecast. India, supported by foreign investments, macro stability and positive earnings outlook, has risen up the ranks to become the most-preferred market among emerging markets (EMs), Morgan Stanley said in its report.

“India rises to 6 to 1 in our process, with relative valuations less extreme than in October, and India’s ability to leverage multipolar world dynamics is a significant advantage,” the bank said.

A few months back, the brokerage firm had cited a resilient Indian economy while elevating its markets from “underweight” to “equal weight”.

It said that the brokerage is overweight on financials, consumer discretionary, and industrial segments. The bank also lent an “add” rating to Larsen and Toubro and Maruti Suzuki India on their Asia Pacific focus and Global Emerging Markets lists.

Also read: India could be Asia’s strongest economy in 2022-23, says Morgan Stanley

Bad news for Chinese markets

While stating that India is stepping into a phase of “long wave boom,” the firm said that China, on the other hand, is reaching the end of one.

Even though China’s recent promises to stimulate its economic growth and revive the private sector has given a boost to the country’s markets, analysts say such measures are not enough to sustain the gains at the stock market.

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The report says that issues with local governments, and unemployment are currently key factors driving Chinese markets. Analysts at the bank say, even though the government during the recent politburo meeting assured to step up stimulus to stabilize economic growth and rejuvenate the private sector, investors are wary and hesitant to invest money, based on their experience about the government’s poor measures to revive the economy since March.