“Morgan Stanley has revised its perspective on the Indian markets, upgrading its assessment from ‘equal weight’ to ‘overweight’. This adjustment is attributed to the improved valuation situation compared to October 2022, a time when the global brokerage first identified the emergence of a new bull market in Asian and emerging market equities.
Presently, India has ascended to the top position as the most favored market among emerging markets (EMs), a significant jump from its previous sixth-place ranking. This rise is attributed to factors such as favorable foreign inflows, macroeconomic stability, and a positive outlook on earnings. In a recent statement, Morgan Stanley analysts highlighted a consistent trend toward sustained growth in earnings per share (EPS) when compared to other emerging markets over the course of various cycles. They further noted that the youthful demographic profile of the country is contributing to an influx of equity investments.
Within specific sectors, Morgan Stanley maintains an overweight stance on financials, consumer discretionary, and industrial segments within the Indian market. Furthermore, the brokerage has assigned an ‘add’ rating to Larsen & Toubro and Maruti Suzuki India, including them in its lists of focus for the Asia Pacific region and Global Emerging Markets.
This current scenario in the Indian markets stands in stark contrast to that of China. While India appears to be entering a prolonged period of growth, China’s situation suggests the potential end of a period of expansion. Morgan Stanley analysts assert that the decision to reassign an ‘overweight’ rating to India and downgrade China to ‘equal weight’ is justified. This shift reflects India’s superior performance in comparison to China and indicates a structural shift in favor of India, signaling a noteworthy breakout.”