UBS downgraded India to "neutral" from "overweight" but simultaneously upgraded China to "overweight", saying Plenum reforms will likely cause China to outperform Asia ex-Japan for the next few months.

"Sometimes, our overweights and underweight moves are driven by a factor in one country. At other times it is just that something else looks better. That's the case with India," UBS said in a November 18 report .

"We still like India, at the micro level a lot. Our thesis of weak growth being good for ROE is something we passionately believe in. But it is by nature a longer-term story, not an overnight sensation," it added and said, on the other hand, a re-rating of China over the coming weeks is likely to make India "pale" by comparison.

In the short-term, the centre-stage probably belongs to China. India is not likely to get much benefit from a China move — albeit more flows to EM equities might help if the China story attracts broader capital back to EM. Perhaps some might view the less focus on GDP growth at the regional level in China as another nail in the coffin of commodities and with it, this in turn might be good for India, UBS strategists Niall MacLeod and Aakash Rawat said in their latest Asia-Pacific report.

"So recognising that China in our view takes centre-stage at least for a few weeks, we take India back to neutral. We are still big believers in the micro story there but this is a longer-term prospect not something that can compete for the attention of a rapid re-rating that we expect in China," they added.

Meanwhile, Indian benchmark indices, the BSE Sensex and the NSE Nifty are trading 1.6 per cent higher at 20,740 and 6,155 points respectively. China’s Shanghai Composite Index added 1.4 per cent.

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