Morgan Stanley upgrades stocks to 'equalweight'

Morgan Stanley upgrades Indian stocks to "equalweight" after being "underweight" since the first quarter of 2011, saying India is now trading at a price to book multiple of 2.1x, close to the trough valuations of 2.0x in the 2002 and 2008 cycles.

"This is an indicator of the extent to which the India market is already pricing in the adverse global environment and the current domestic situation of high inflation and slower trend GDP growth," it said.

Morgan Stanley adds Indian stocks tend to perform well versus MSCI emerging market indexes after a period of oil price declines.

Morgan Stanley upgrade comes after Deutsche Bank and J P Morgan upgraded Indian stocks to "overweight" from "neutral".