JP Morgan upgrades India to 'overweight', adds Sun Pharma, BoB, and HUL to its EM Model Portfolio

JP Morgan upgrades India: JP Morgan has become the latest global brokerage firm to turn bullish on India. The brokerage has upgraded India to 'overweight' from 'neutral'. The brokerage said that it had upgraded India on account of both cyclical and structural reasons. JP Morgan has recommended that investors use the near-term correction or dip as an opportunity to add stocks to their portfolio. It noted that, historically, the Indian market has risen ahead of general elections.

It further added that among emerging markets (EMs), India's nominal GDP is the strongest. Additionally, as compared to developed markets (DMs), India's risk-reward ratio is better. Further, increasing interest in India's bond markets among global investors will also boost India.

The brokerage has added Sun Pharma, Bank of Baroda, and HUL to its EM Model Portfolio. It has set HUL's target price at Rs 2,800, Sun Pharma's at Rs 1,260, and Bank of Baroda's target at Rs 230.

Meanwhile, the brokerage has also upgraded Saudi Arabia to 'overweight' while South Korea has been downgraded to 'neutral'.

Earlier this month, global brokerage firm CLSA upgraded its India allocation to '20 per cent overweight' from '40 per cent underweight', with a view that the country's strong economic fundamentals will help sustain the momentum in the equity market.

CLSA added that strong credit, better energy pricing, strong GDP, and earnings per share (EPS) growth have boosted confidence. The brokerage said that India's inclusion in the global fixed-income benchmark will also lend significant support. It further said that among emerging markets, India's +6 per cent GDP growth outlook is the best. READ MORE

Last month, Nomura upgraded India's rating to 'Overweight' from 'Neutral' earlier. The global brokerage said that India's structural growth story is now well-known as the major beneficiary of the China+1 theme, possessing a large liquid equity market. Nomura said that it sees recent weakness in the domestic market, driven by higher oil prices, as an opportunity to raise its exposure to domestic stocks. It further said that weakness may persist in the near term, presenting even better timing to enter the market.

In August, Morgan Stanley raised India’s rating to overweight, saying relative valuations are 'less extreme' than in October, and the nation’s reform and macro-stability agenda supports a strong capex and profit outlook. "India is arguably at the start of a long-wave boom at the same time as China may be ending one," strategists at Morgan Stanley wrote in their research note.