Goldman Sachs upgrades India

Goldman Sachs on Monday upgraded India to “marketweight” after keeping an “underweight” rating for over a year citing a likely improvement in the macroeconomic situation, lower oil prices, attractive stock valuations and the government’s recent initiatives to push policy reforms.

Goldman Sachs on Monday upgraded India to "market weight" from "underweight," given a likely turn in the macro cycle, lower oil prices, lower valuation, and policy reform.

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"The latest move by the RBI to raise the repo rate by 50 basis points was a clear sign in our view that the central bank is vigilant in bringing down inflation expectations," Goldman said in a note.

Despite the near-term weakness, policy tightening was a necessary step to reigning in inflation expectations and will ultimately serve as a net positive for the Indian equity market on a medium to longer term horizon, it added.

The Reserve Bank India (RBI), which has raised rates 11 times since mid-March 2010, is expected to be nearing the end of its tightening cycle.