Morgan Stanley upgrades India to 'overweight', downgrades China to 'equal weight'

India’s status has been upgraded to ‘overweight’ by brokerage firm Morgan Stanley has also downgraded on China to ’equal weight’. “We upgrade India to overweight for secular leadership. We see a secular trend towards sustained superior USD EPS growth versus Emerging Markets over the cycle with a young demographic profile supporting equity inflows,” Morgan Stanley said in a note. The US-based investment bank views that India is poised for substantial and sustained economic growth at a time when the rest of the world is slowing down. The upgrade of India’s status comes merely four months after Morgan Stanley elevated the country from ‘underweight’ to ’equal weight’ on 31 March, citing factors including reduced valuation premium and the resilient economy. What does overweight rating means? An overweight rating means that Morgan Stanley expects India’s economy to perform better in the future. Significantly, the upgrade is in the backdrop of US losing AAA status and economic slowdown in China. Analysts of Morgan Stanley expressed their belief in a consistent trend of sustained superior earnings per share (EPS) growth in India compared to other emerging markets (EMs) over the economic cycle. India on first spot The US-based investment bank said India has jumped from the sixth position to the coveted first spot in its rankings. “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,” Morgan Stanley analysts said. “India’s future looks to a significant extent like China’s past… India is arguably at the start of a long wave boom at the same time as China may be ending one," Morgan Stanley said in its report. The brokerage expects China’s GDP growth to be around 3.9 per cent at the end of the decade compared to India’s 6.5 per cent. With inputs from agencies