JP Morgan upgrades India to 'Overweight', includes top stocks in EM portfolio

JP Morgan has elevated India to an "overweight" rating, aligning with other major global brokerages like Morgan Stanley, CLSA, and Nomura. This upgrade is attributed to a combination of factors including the positive influence of general elections, robust growth in emerging markets (EM), and the expansion of India's bond market, which is expected to reduce risk premiums.

The upgrade is founded on both cyclical and structural factors. These encompass India's robust nominal GDP growth propelled by demographic trends and infrastructure investments, as well as competitive risk-adjusted returns in contrast to developed markets, and the growth of the domestic bond market.

JP Morgan emphasizes that EM equities may face challenges as US long rates increase and fluctuations in the dollar influence growth and rates. A substantial demand for EM equities may only materialize once the US economic cycle stabilizes with a GDP recession and rate cuts.

Incorporating Sun Pharmaceutical Industries Ltd, Bank of Baroda, and Hindustan Unilever into its EM Model portfolio, JP Morgan is confident in India's potential for investment. The brokerage's move echoes a broader trend of positive sentiment toward India's economic outlook, with other global financial institutions also upgrading their assessments.