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Analysts Debate Appeal of ‘Sour’ Brazilian Stocks

As widespread demonstrations hit Brazil and the emerging market sell-off continues, analysts are divided on whether the dip in Brazilian stocks has created a buying opportunity.

(Read More: After Turkey, Brazil Hit by Widespread Protests)

Jose Martins Soares, the head of emerging markets research at Espirito Santo, said the decline had created value in Brazilian stocks for the first time in a long while.

"Brazil has suffered from the overhyped expectations of hyper-growth, and to a certain extent, investors were disappointed. But if you look closely at the market from more of a bottom-up perspective, the consumer story is still there, as is real wage growth. It is still an economy in full employment; we wish some of the European economies had that situation," Soares told CNBC.

Brazilian stocks are down 13 percent on the month and 19 percent on the year, versus a 9 percent decline in the MSCI Emerging Markets Index, year-to-date.

Soares said Brazilian banking and mining stocks offered particularly good value at present. His top stock picks included Itau Unibanco, a bank which Soares forecast would outperform its peers this year, plus mining company Vale and utilities firm Cemig.

(Read More: Bombardier President: We're Bullish on BRICS)

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However, Morgan Stanley warned on Friday that Brazil was one of the emerging market countries most at risk of a sudden halt to capital inflows, if the U.S. Federal Reserve moved to taper off its asset purchases.

"We remain underweight on Brazilian equities because of the challenging macro outlook and currency risk," said Morgan Stanley's Manoj Pradham in a research note. He named the metal and mining sectors as the most exposed.

(Read More: This Nation May Be Most at Risk From Capital Flight)

He added that Brazilian equities were currently in a "sour spot", and that the medium-term growth and profitability outlook for Brazilian companies remained "challenging".

"A sudden stop scenario and commodity price volatility, against a backdrop of weaker external and domestic demand leaves the sector most vulnerable in our view," he said.

By CNBC's Jenny Cosgrave: Follow her on Twitter @jenny_cosgrave