Morgan Stanley upgrades Reliance Industries' stock to "overweight" from "underweight" and raises its target price to 961 rupees from 798 rupees.

Reliance's operating environment is improving across its core businesses, the investment bank says, adding it should spur a renewed earnings upgrade cycle.

Morgan Stanley also cites lagging share prices and a record low foreign portfolio ownership as reasons for the upgrade.

The bank also views Reliance's planned $5 billion capex for domestic exploration and production and its decision not to invest in 900Mhz telecom auctions as key positives.