In a recent shift of investment focus, JPMorgan has upgraded India's rating to 'Overweight' citing the country's leading role in nominal GDP growth among emerging markets.
JPMorgan strategists pointed out several contributing factors for this change. These include demographic trends, infrastructure investments, and a government shift towards private sector dominance which has improved India's return-to-risk perspective. They also mentioned a "near-term correction/dip" and the seasonal impact of Lok Sabha elections as reasons for the decision.
The Indian equity market has been showing strong GDP growth, surpassing that of China's slowing real GDP growth. This robust performance has led to a reallocation of investments by US pension funds to India.
JPMorgan plans to leverage the positive historical seasonality of general elections in India. When considering investment opportunities in emerging markets, investors are primarily focusing on four countries: India, Indonesia, Saudi Arabia, and Mexico. However, given recent trends and developments, India seems to be leading the pack.
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