JP Morgan India upgraded Indian equities to “overweight” from “neutral” last week. This was despite acknowledging the risk factors facing the economy, and demonstrated that they were encouraged by what they called a number of more positive factors including historic valuations.
I don’t usually give much credence to reports from agencies like S&P, Moody’s, Goldman Sachs, Morgan Stanley and most others.
However, JP Morgan India, under Kalpana Morparia, seems to have got the long-term trend right, even as far back as October 2008 when the markets were making a capitulation bottom. In September 2011, they had the courage to call the IIP numbers misleading and take a stand stating that economic growth is not collapsing.
Among the major global financial firms, JP Morgan is not just the first out of the blocks in acknowledging the strengths of the India story, but it has also made a bullish call when pretty much every other major firm has made a bearish call. That takes a lot of courage in the murky world of large and influential financial firms.
Moody’s had followed immediately with a “stable” outlook for India sovereign rating. That’s again courageous given that S&P and Fitch have scaled down their outlook to “negative” with a threat of downgrading the sovereign rating to below investment grade / junk status.
In fact, it now seems that every other brokerage firm is starting to come out of its slumber in trying to rate India “overweight”, “stable” etc.
The question to ask is that when the signs of recovery and an upcoming bull market were apparent as long ago as back in Dec 2011 (Dec '11: Macro-Technicals point to a possible bottom) why are these agencies (except maybe JP Morgan) only waking up now?