Morgan Stanley Upgrades India to Overweight and Downgrades China in Latest Investment Outlook

Morgan Stanley Upgrades India to Overweight and Downgrades China in Latest Investment Outlook

Ira Singh
5 Aug’23

In a recent development, global financial services firm Morgan Stanley has revised its outlook on Indian markets, upgrading its view from “equal weight” to “overweight”.
The upgrade comes as the firm highlights easing valuations in the Indian market, particularly when compared to October 2022 levels.

Brokerage firm Morgan Stanley has upgraded India’s status to ‘overweight’, as it is of the view that the country is poised for substantial and sustained economic growth, at a time when rest of the world is slowing down.

Simultaneously, it has downgraded its rating on China to ‘equal-weight’.This strategic shift in Morgan Stanley’s assessment reflects a growing optimism in the trajectory of the Indian economy and its equity markets.

India is now the top ranked, most-preferred market among emerging markets (EMs), rising from the sixth spot, due to supportive foreign inflows, macro stability and positive earnings outlook, the brokerage said in a note late Wednesday.

“We see a secular trend towards sustained superior earnings per share (EPS) growth versus EM over the cycle,” Morgan Stanley analysts said, adding that a young demographic profile is supporting equity inflows.

Sectorally, the brokerage remains overweight on financials, consumer discretionary and industrial segments in India, and has an “add” rating on Larsen & Toubro and Maruti Suzuki India in its Asia Pacific focus and Global Emerging Markets lists, according to reports.

As the Indian economy continues to evolve and global market dynamics shift, Morgan Stanley’s revised stance on Indian markets serves as an important indicator of changing perceptions within the international investment community.However,it will be interesting to observe how this upgrade impacts the country’s economic trajectory and investor sentiment in the coming months.