During a time of economic recession for countries like America and China, India’s trust in the world seems to be growing. This is evident in the latest report by renowned brokerage firm Morgan Stanley, which has upgraded India’s rating to ‘overweight’.
On the other hand, China has received a major setback from the agency as the brokerage downgraded its rating on Chinese stocks. Additionally, Fitch Ratings, a top global credit rating agency, downgraded the United States’ credit rating.
The brokerage firm believes that India’s economic reforms and macro-stability agenda will support a strong outlook for capital expenditure and profits. Morgan Stanley expects India’s economy to perform well in the future, anticipating a long-lasting bull run for India while China nears its end.
India’s Era Begins
Morgan Stanley’s report states that India’s future bears resemblance to China’s past. The report explains, “India is arguably at the start of a long wave boom at the same time as China may be ending one.” India is projected to achieve a GDP growth rate of 6.2%, while China’s GDP growth rate is expected to be around 3.9% by the end of the decade.
Furthermore, India benefits from demographic trends, while China has seen a decline in its working-age population since the beginning of the last decade. Morgan Stanley analysts highlight that “India rises from 6 to 1 in our process, with relative valuations less extreme than in October, and India’s ability to leverage multipolar world dynamics is a significant advantage.”
March Upgrades
Four months earlier, in March, the brokerage firm upgraded India from underweight to equal-weight. Morgan Stanley considers India as the top-ranked and most preferred market among emerging markets.
Morgan Stanley has set a Sensex target of 68,500 by December 2023, provided there is no significant rise in commodity prices and no recession in the US.
Understanding “Overweight” in Market Rating
When a research firm refers to a market as overweight, it means that the market is expected to outperform other markets. Equal-weight indicates that the market should perform on par with other markets, while underweight suggests that the market is lagging behind others.
Downgraded Rating on Chinese Stocks
Morgan Stanley expressed concerns about China’s economic outlook, leading to the downgrade of its rating to “equal-weight”. The analysts advise caution and profit-taking amidst the recent rally driven by government stimulus packages.
Downgraded Rating for the USA
Earlier, rating agency Fitch downgraded the world’s largest economy, the USA. Fitch lowered the US rating from AAA to AA+. Subsequently, the US stock market experienced a decline.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
