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Morgan Stanley has upgraded Indian equities to “overweight” from “equalweight’’.
NSE index is up 1.5 per cent, but has fallen as much as 15 per cent from its record high hit in March 2015.
Benchmark BSE index was up 1.4 per cent at 0515 GMT.
Valuations relative to emerging markets have become more attractive, and overweight positioning among fund managers has come down, says the Wall Street brokerage.
It adds that India is still trading at 36 per cent premium versus MSCI EM, which it believes is fair given India’s macro stability and likely earnings trajectory gap versus the rest of emerging markets.
Rising dividends, GST Bill prospects, further monetary policy easing and benign monsoon are also major potential catalysts for Indian equities, it says.
It expects 3 per cent earnings growth in FY2016 and a 14 pct YoY growth in FY2017/
Morgan Stanley is a global financial services firm and a market leader in securities, asset management and credit services.
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