Investment bank Morgan Stanley on Monday hiked its forecast for India's FY13 gross domestic product (GDP) growth from 5.1 per cent to 5.4 per cent, citing better-than-expected GDP growth for the July to September quarter and the stabilization in non-agriculture growth.

Recently released provisional GDP data showed that India's GDP grew at a rate of 5.3 per cent in the July-September period year-on-year.

Morgan Stanley acknowledged that the country's economic reform had bottomed, abut also predicted that it could accelerate in the coming quarters.

Last week, Goldman Sachs said that India's economy would grow at an estimated rate of 6.5 per cent in 2013, and would further accelerate to 7.2 per cent in 2014.

Morgan Stanley's report stated that the basis of its upbeat assessment was easing of financial conditions, which were partially driven by some decline in policy rates, and the announced economic reforms.

The investment bank's report also suggested, "We believe further reforms on fiscal consolidation, financial liberalisation and infrastructure growth will be needed to sustain an improvement in trend growth."

As per the recently released provisional, official figures, the manufacturing and agricultural sectors grew at annual 0.8 per cent and 1.2 per cent respectively in the second quarter of current fiscal; while the mining and construction sectors expanded at 1.9 per cent 6.7 per cent respectively.