InvestorQ : Why exactly has Morgan Stanley downgraded Indian equities?
indhumathi Sayani made post

Why exactly has Morgan Stanley downgraded Indian equities?

12 months ago

Morgan Stanley became the third major FPI to downgrade Indian equities after UBS and Nomura in the last few weeks. Morgan Stanley has downgraded Indian equities from overweight to equal-weight, which is basically indication of valuation froth building up in the markets. Morgan Stanley has cited expensive valuations as a major reason for the downgrade. For example, the MSCI India is up 27.5% while MSCI EM is marginally down.

Morgan essentially sees pressure on Indian markets coming from the expectations of Fed tapering as well as the oil price rally. However, Morgan Stanley has underlined that at 24 times earnings, the valuations are far from being unreasonable. Morgan Stanley continues to remain positive about nascent capex, GDP and supportive central policies. Essential the concerns are more at a marginal level than at a structural level.