Global financial services firm, Morgan Stanley, has revised its stance on Indian markets from “equal weight” to “overweight”, positioning it as the most favoured market among emerging economies. This shift is attributed to encouraging foreign investments, macroeconomic stability, and an optimistic earnings forecast, Reuters reports.

Turnaround: The upgrade by Morgan Stanley comes in light of the softening valuations compared to October 2022, when the brokerage had marked the beginning of a new bull phase in Asian and emerging market equities.

The brokerage continues to maintain an “overweight” position on India’s financials, consumer discretionary, and industrial sectors. The brokerage has an “add” rating on Larsen & Toubro and Maruti Suzuki India in its Asia Pacific and Global Emerging Markets lists.

Contrasting with the situation in China, India is seen to be at the commencement of a long-term boom cycle, while China might be nearing the end of one. “The shift back to an ‘overweight’ rating for India and downgrading China to ‘equal weight’ seems justified,” stated Morgan Stanley analysts.

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