Morgan Stanley Sees Strong Potential in India, Upgrades to ‘Overweight’
Written by Sanjay Kumar
Morgan Stanley
Investment banking company
- CEO: James P. Gorman (1 Jan 2010)
- Headquarters: New York, New York, United States
- Founders: Henry Sturgis Morgan, Harold Stanley, Dean G. Witter
- Subsidiaries: Morgan Stanley Wealth Management, MORE
- CFO: Sharon Yeshaya
- Presidents: Ted Pick, Andy Saperstein
Morgan Stanley, a brokerage firm, has upgraded India’s status to ‘overweight’ due to its belief in the nation’s reform and macro-stability agenda, which supports a strong capital expenditure (capex) and profit outlook. The ‘overweight’ rating indicates the firm’s expectation that India’s economy will perform better in the future. The upgrade comes at a time when the US is losing its AAA status and there is an economic slowdown in China.
According to the firm, India’s macro indicators remain resilient, and the economy is on track to achieve the forecasted GDP growth of 6.2%.
Morgan Stanley analysts explained that India has risen significantly in their process, moving from rank 6 to 1. The relative valuations are now less extreme than in October, and India’s ability to leverage the dynamics of a multipolar world is seen as a significant advantage.
The report also notes that India might be at the beginning of a long wave boom, while China’s boom may be coming to an end.
In contrast, the firm has downgraded its rating on Chinese stocks to ‘equal weight,’ advising investors to capitalize on the rally driven by government stimulus pledges and take profits.
While Chinese assets have experienced a boost recently due to promises from Beijing to spur growth and revitalize the private sector, Morgan Stanley analysts caution that easing measures are likely to be gradual and may not be enough to sustain gains.
The latest upgrade follows Morgan Stanley’s previous move to elevate India from ‘underweight’ to ‘equal weight’ on the basis of the country’s resilient economy.
Experts believe that Morgan Stanley’s upgrade will lead to increased foreign inflows for the Indian market. They consider the upgrade to be justified and positive for India, as it is seen to be in a favorable position with a robust economic outlook.
6. Chokkalingam, Founder & Head of Research at Equinomics Research, highlighted that the International Monetary Fund (IMF) recently raised India’s GDP growth forecast for FY24 to 6.1% from the previous estimate of 4.9%. Additionally, India’s inflation is expected to decline to 4.9% in FY2024, and the government debt to GDP ratio has moderated while capex is rising significantly. These factors are believed to bode well for the country and boost foreign capital inflow.
Shrey Jain, Founder and CEO of SAS Online, sees Morgan Stanley’s bullish stance on India as an invitation not only to Indian investors but also to investors worldwide, including Foreign Institutional Investors (FIIs) and rating agencies. Jain anticipates a continued inflow of foreign capital into the Indian market.
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