Morningstar shifts to debt, says valuations for Indian equities stretched

The firm believes that investors are relying on the benefits of future growth opportunities to stoke returns, which may not be good investor behaviour

Valuations of Indian equities appear stretched at this point, given their sharp run-up from March lows, observed a report by Morningstar Investment Adviser India, a subsidiary of the independent investment research provider Mornin-gstar. The advisory firm said return expectations from Indian equities are lower than what they were at the start of 2020, with all three market-cap segments — large-, mid- and small-cap — offering low real returns. 

Morningstar Investment Adviser India has cut its allocation to Indian equities across all its four PMS portfolios. The allocation has shifted to the medium- to long- term debt segment, which ranks relatively better