India upgraded to No.1 slot in Morgan Stanley's emerging markets list
Morgan Stanley on Thursday upgraded Indian stocks to overweight rating and ranked India as the No. 1 market in its basket of Asian emerging markets ex-Japan. Beating the likes of Korea and UAE, India jumped 5 places in Morgan Stanley's list on the back of a structural uptrend, secular leadership and relative valuations being less extreme than in October.
«India now becomes our core OW market within APxJ/EM with 12mf P/E and trailing P/B standing at +1.4 S.D and +0.6 S.D. above historical average as a premium to pay for higher growth opportunities. Valuation premiums to EM and China have moderated significantly from last October's high and started to spike up again,» Morgan Stanley said in its report.
Multipolar world trends are supporting FDI and portfolio flows, with India adding a reform and macro-stability agenda that underpins a strong capex and profit outlook, it said, adding that a secular trend is seen toward sustained superior USD EPS growth versus EM over the cycle, with a young demographic profile supporting equity inflows. Morgan Stanley's India economics team says the country's macro indicators remain resilient and the economy is on track to achieve the 6.2% GDP forecast. «12mf EPS is trending higher in a structural manner, supported by a favorable demographics trend, improvement in labor productivity and a multipolar world dynamic that drive up service exports and meaningfully higher FDI,» the analysts said.
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