Morgan Stanley, the global rating agency, has upgraded India to ‘overweight’ category, giving it the top rating among Asian markets, while cutting Australia to ‘underweight.’ Additionally, it assigned China and Taiwan an "equal-weight" rating and went on to assign Korea an "overweight" grade.
A separate report by S&P Global said India's economy will expand by 6.7% annually between fiscal years 2024 and 2031, increasing its GDP to $6.7 trillion from fiscal year 2023's $3.4 trillion. The predicted increase in per capita GDP from $2,500 to approximately $4,500.
Analysts at Morgan Stanley said that a long upward cycle in India is starting while the same is ending in China. Of the 27 countries tracked by the rating agency's strategists, India rose to number 1 from number 6 earlier with relative valuations for the country less extreme than in October 2022.
“Multipolar world-trends are supporting FDI and portfolio flows, with India adding a reform and macro-stability agenda that underpins a strong capex and profit outlook. We see a secular trend toward sustained superior (earnings per share) growth versus emerging markets over the cycle, with a young demographic profile supporting equity inflows,” the report noted.