New Delhi, Aug 3 (IANS): BSE Sensex was down 565 points in trade on Thursday afternoon as the market absorbed the impact of the US downgrade.

Sensex was trading at 65,216 points after a steep fall yesterday.

Titan led the Sensex losses down more than 2 per cent.

Morgan Stanley has upgraded India to overweight. India rises from number 6 to number 1 in our process, with relative valuations less extreme than in October, while MS macro, strategist and bottom-up analyst scores reflect MS' Blue Paper thesis on India's Decade.

Our call last October for the beginning of a new bull market in Asia/EM equities is increasingly priced, with MSCI EM up 24 per cent since the late-October trough, 5 per cent below our June 2024 target of 1,100.

Australia moves down to number 22 of 27 markets in our framework, Morgan Stanley said.

Taiwan moves down to number 7 in our framework. It downgraded MSCI China to equal weight as growth and valuation concerns remain: MSC China is now within 7per cent of our target of 70 and has delivered 9 per cent total returns since December 4, in line with MSCI EM.