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"We assign a high likelihood of a sovereign ratings upgrade for India as most macro indicators have exhibited improvements in past 2 years, " said an India Equity Strategy report released on Thursday.
Research Analysts Abhay Laijawala and Abhishek Saraf authored the note.
The analysts also predicted a 23% gain in the Sensex from current levels. They expect the Sensex to reach 33,000 by December -end 2015.
"At our target, the Sensex would trade at 18.4× FY16 EPS and 15.5× FY17 EPS, with earnings CAGR of 17.7% over FY15-17," said the report.
They added that they expect domestic institutions to play a more prominent role, even as foreign inflows would be aided by institutions who are raising their India exposure.
Deutsche is overweight on financials, industrials, and materials. Its bearish stance includes sectors such as information technology.
