MUMBAI: Morgan Stanley on August 2, upgraded India to overweight, four months after it was upgraded to equal weight from underweight on March 31. The brokerage firm believes that the country is just at the start of a long-wave boom, according to a report byCNBC-TV18.
Morgan Stanley, in a note, highlighted that there are things that have changed fundamentally in India. These are due to structural reforms, supply-side reforms like corporate tax cuts and production-linked incentive schemes, and regulation and formalisation of the economy, among other things.
Morgan Stanley added that it expects Sensex to reach 68,500 by the end of December this year. It will trade at a price-to-earnings multiple of 20.5 times compared to a 25-year average of 20 times. The brokerage also added that the premium over the historical average reflects greater confidence in medium-term growth.
According to the note, the target on the index is based on factors such as the absence of major upward movements in commodity prices, the US escaping a recession, and the Reserve Bank of India maintaining a pause in its actions.
