JPMorgan downgraded the rating on Indian equities to “underweight” and cut its full-year forecast for the MSCI Emerging Markets Index. The brokerage has made these cuts due to geopolitical tensions, inflation concerns and the impact on global financial markets.
The brokerage had earlier given a “neutral” rating on Indian equities. He then cited a weak rupee and its impact on growth, rising prices of commodities such as oil, potential outflows from the portfolio and a domestic monetary tightening cycle.
Commodity prices have skyrocketed due to Western sanctions imposed on Russia after the invasion of Ukraine. Inflationary pressures continue to mount globally, forcing governments and central banks to reevaluate their monetary policies.
At the same time, the Government of India has reduced its growth forecast for the financial year 2021/22 from 9.2% to 8.9%.
JPMorgan now expects the MSCI Emerging Markets (EM) index to reach 1,300 by the end of the year, although it was earlier projected to be at 1,500. The index closed at 1,081 on Wednesday.
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Due to rising commodity prices and keeping Russia out of the MSCI EM Index, the brokerage expects this year’s earnings to be weak.
FTSE Russell and MSCI said earlier this month that they would remove Russian stocks from all their indexes.
Economists at JP Morgan said in a note on Wednesday that our view is that EM equities may outperform.
JP Morgan’s co-chief of consumer and community banking executive Marianne Lake said at an investor conference in September that JP Morgan’s investment bank had a “very strong” environment, with better-than-expected performance in mergers and acquisitions. Benefited from
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