Morgan Stanley Downgrades India To Equal-Weight Over Valuations: Report
NDTV
Morgan Stanley downgraded Indian equities to equal-weight from overweight due to expensive valuations, and said it expects the market to consolidate ahead of potential "short-term headwinds".
Morgan Stanley downgraded Indian equities to equal-weight from overweight on Thursday due to expensive valuations, and said it expects the market to consolidate ahead of potential "short-term headwinds".
The brokerage said while the country's key fundamentals are positive, at 24 times forward price-to-earnings, Indian equities could see some consolidation ahead of the Fed tapering, a likely rate hike by India's central bank in February, and higher energy costs.
Morgan Stanley's downgrade follows similar moves by Nomura and UBS over expensive valuations. Indian stocks have strongly outperformed other emerging markets this year, with the MSCI India index up 27.53 per cent, compared to a 0.65 per cent slip in the MSCI Emerging Market index.
Morgan Stanley attributed the outperformance to bullish consensus earnings expectations and a "favourable" government reform agenda.
