Societe Generale Downgrades India Equities Amidst Election Volatility, While Nomura, Morgan Stanley and Goldman Sachs Offer Contrasting Views
Societe Generale downgraded Indian equities from ‘overweight’ to ‘neutral’ due to anticipated volatility in the stock markets ahead of the upcoming general elections. The strategists at Societe Generale, Frank Benzimra and Rajat Agarwal, mentioned that India’s economic growth outlook coupled with the electoral uncertainty could contribute to market fluctuations.
The report highlighted that 2024 poses significant risks for markets globally, with 40 national elections scheduled, starting from Taiwan in January to the US presidential election in November. Additionally, uncertainties surrounding the Federal Reserve’s rate decisions were noted as contributing to global financial market volatility.
In contrast to Societe Generale’s downgrade, Nomura and Morgan Stanley upgraded their ratings on Indian equities. Nomura, in September, shifted its rating to overweight, emphasizing India’s position as a major beneficiary of the “China+1” theme. Despite acknowledging expensive valuations, Nomura analysts viewed the current softness in the market as an opportunity to increase exposure.
Morgan Stanley also took an optimistic stance, upgrading India to “standout overweight” on October 20. They cited improving relative economic and earnings growth, along with a macro-stability setup capable of withstanding a higher real rate environment. According to Morgan Stanley, India became their most preferred emerging market.
Goldman Sachs also upgraded India’s rating to overweight while lowering its rating on China stocks traded in Hong Kong. The bank asserts that India is more favorably situated to capitalize on the global economic recovery compared to China. (Check embed article on Goldman Sachs)
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