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[hfe_template id='11223'] [ad_1] Indian equities are entering what Morgan Stanley’s Ridham Desai calls a “rare combination” phase that, in his view, strengthens the case for a valuation re-rating of domestic stocks. Indian stocks, Desai argues in a strategy report, now offer an unusual mix of “inexpensive relative valuations, poor trailing performance, strong policy stimulus and a consequent growth upcycle, an undervalued currency, weak foreign positioning and potentially a new buyback cycle.” The 12-month trailing performance is “the worst in history” even as relative valuations are “approaching previous troughs”, with foreign portfolio investor (FPI) positioning having weakened steadily over the past four years. “India could be a pain trade, which may just accelerate the returns on stocks,” the report notes, adding that an undervalued rupee and a friendlier tax regime are likely to trigger “more buybacks” and keep net equity supply modest. On the macro front, Morgan ...