Emerging-market stocks should rally into the end of the year on valuations and post “big” gains over the next year, Citigroup Inc. said.

“After their fourth-worst quarter since 1990, emerging- market equities now price in recession, but not a return to 2008-9,” Citigroup analysts including Geoffrey Dennis wrote in a report dated Thursday. “Further volatility is likely in the fourth quarter as the EU debt crisis plays out and on further global growth downgrades.”

Citigroup raised its rating on India to “neutral” and said it’s staying “overweight” on Asia and “underweight” on Latin America and CEEMEA, or Central Eastern Europe, Middle East & Africa.