Morgan Stanley upgrades India to “standout overweight” amid strong economic growth

In a move that underscores India’s growing economic strength, Wall Street firm Morgan Stanley has upgraded the country to “standout overweight”. The decision acknowledges the robustness of India’s macro-stability setup and its shift towards manufacturing under the China Plus One strategy, which was implemented in 2021-2022.

Morgan Stanley’s upgrade comes as India’s economic growth, primarily driven by its burgeoning manufacturing sector, continues to garner attention from international economists and brokerages. Amidst the evolving dynamics of a multipolar world, India has emerged as Morgan Stanley’s top pick among emerging markets.

This upgrade has sparked a surge in domestic capital inflows, stimulating both Foreign Direct Investment (FDI) and portfolio investments. Furthermore, Indian equities have earned the highest spot in Morgan Stanley’s global equity investment ranking with a score of 68, outpacing Singapore, Greece, Mexico, and Poland.

From 2021 to October 2022, India has led the index by 45.5% in USD terms. This performance is indicative of India’s strong position within the global economy and its potential for continued growth.

Looking ahead, Morgan Stanley predicts that India’s relative Earnings Per Share (EPS) will substantially outperform other emerging markets. This forecast is based on India’s low correlation and revenue dependence on the US and China. The firm’s assessment suggests that India’s economic trajectory is on an upward trend, bolstered by its robust macro-stability setup capable of sustaining a higher real rate environment.

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