Morgan Stanley remains positive on Indian equities, stating that investing in the market could be rewarding if global cues remain stable. The firm expects India to resume its outperformance compared to other emerging markets (EM) in the coming months.
The brokerage highlights strong macroeconomic stability, supported by improving terms of trade, a declining primary deficit, and falling inflation volatility. These factors are expected to provide a conducive environment for growth.
Morgan Stanley forecasts mid-to-high teen earnings growth annually over the next 3-5 years, driven by an emerging private capex cycle and the deleveraging of corporate balance sheets. Additionally, structural growth in discretionary consumption and a reliable domestic risk capital base are expected to further support economic momentum.
The firm also notes that these factors have reduced India’s beta to EM to ~0.4, which helps explain the premium valuation multiples in the Indian market.
Disclaimer: The views expressed are those of the brokerage firm and not of Business Upturn. Investors are advised to conduct their own due diligence before making any investment decisions.