JPMorgan upgrades India to 'overweight', says the country offers the strongest emerging market

JP Morgan rating: JPMorgan has upgraded India to Overweight from Neutral. The global financial firm has also said that India offers the strongest emerging market (EM), nominal GDP compounding (demographic trends, infrastructure investment needs) and has competitive risk-adjusted returns to developed market (DM) equities.

JP Morgan Rating Upgrade

JPMorgan asked the investors to use this near-term correction as an opportunity to add and leverage on a positive historical seasonality to general elections. Further it has added Sun Pharmaceuticals Industries Ltd, Bank of Baroda Ltd , and Hindustan Unilever in its EM model portfolio.

Also Read: Morgan Stanley upgrades India to overweight, slashes China to equal weight

The firm further said that emerging markets are poised to face threats due to US rate hike. The EM equities have faced obstacles on both growth and rate.

"The road bumps for EM equities to outperform increase primarily as US long rates move higher. The infamous USD smile has been an obstacle for EM equities on two levels - growth and rates. It seems that investors need to see the cycle completing in the US - GDP recession and rate cuts - before a sustainable bid for EM equities emerges," JPMorgan said.

Also Read: Stock market crash: Sensex plunges 900 points as markets fall for sixth straight session

The JP Morgan rating upgrade has come, even when the Indian equity markets slumped for six straight days as foreign investors continue to sell their shares. The fall in markets is the worst run in eight months.

However, JPMorgan is not the only financial institution that has upgraded India. Earlier Morgan Stanley India a 'Standout Overweight'. Meanwhile, CLSA has upgraded India's portfolio allocation to 20 per cent above the MSCI benchmark against 40 per cent underweight earlier. Likewise, Nomura also increased India's rating to overweight from normal.