In light of India's solid macroeconomic fundamentals and the anticipated benefits from the "China plus one" policy, Japan's Nomura Group became the most recent major global financial institution to upgrade India's ratings from "neutral" to "overweight."
Analysts at Nomura believe there could be some cyclical slowdown in the next few months, but that won’t alter the “structural attractiveness” of India as a long-term investment destination. India received the highest rating among Asian emerging markets last month after Morgan Stanley, another major global financial institution, elevated it to the 'overweight' category. Its researchers had noticed that while a long ascending cycle was beginning in China, it was coming to a stop in India. Of the 27 countries tracked by Morgan Stanley’s Asia strategists, India rose to number 1 from number 6 earlier. In June this year, Goldman Sachs, another financial major, also upgraded India to an ‘overweight’ status.
Nomura analysts said India is a “large-liquid market and a counterweight to north Asia if slowdown in the West occurs and China continues to disappoint on recovery”. “(It’s) home to a number of high quality, growth stocks albeit expensive (but are) less exposed to global trade slowdown,” the report noted. For these analysts, another positive for the Indian market is how, despite high interest rates, corporate earnings are being revised upwards and domestic flows are still holding up well.