Morgan Stanley states that the ongoing Indian bull market, which has surpassed the 2003-08 bull run in length, still offers room for significant upside. Despite being one of the least volatile bull markets, cumulative returns remain a third of the 2003-08 cycle, leaving potential for growth.
The firm highlights that financials, consumer discretionary, industrials, and technology sectors are expected to outperform, driven by better return on equity (ROE) and sustained earnings growth. Morgan Stanley continues to back cyclical sectors over defensive plays, indicating that valuations have room for expansion.
The current market rally is characterized by better gains relative to other emerging markets, with a preference for high-ROE names that can sustain earnings growth over the medium term.
