Morgan Stanley has highlighted key drivers for India’s equity markets as the country enters the first quarter of CY2025. The brokerage sees robust growth signals supported by domestic and global developments, while a series of structural reforms and government initiatives are expected to bolster earnings momentum.
Key Highlights:
- Robust Growth Signals:
Morgan Stanley anticipates strong growth signals in the months ahead, fueled by heightened capital market activity and key global developments. - Fiscal Discipline as a Priority:
The government’s focus on reducing the primary deficit to zero remains a cornerstone of the country’s fiscal strategy, creating a positive backdrop for economic stability. - Next Leg of Reforms:
A series of structural reforms are expected to act as key growth drivers, including:- Increased infrastructure spending
- Restructuring of GST rates
- Direct tax reforms
- Energy transition initiatives
- More free trade agreements
- Earnings Growth Support:
Earnings are likely to be supported by:- Accelerated government spending
- An expanded wedding season
- A strong summer crop output
- Earnings Upside for Q3FY25:
Despite recent downward revisions to earnings estimates, Morgan Stanley sees upside potential in Q3FY25 as catalysts like strong consumer spending and fiscal support take effect. - Global Decoupling:
The correlation of India’s equity returns with global equities continues to decline, creating a unique opportunity for the country to outperform amidst global market volatility.
Morgan Stanley’s strategy reflects optimism for India’s equity markets in the near term, driven by fiscal discipline, structural reforms, and strong earnings potential. Investors are expected to benefit from a favorable domestic environment and reduced dependency on global trends.
Disclaimer: This article is for informational purposes only. Please consult a certified financial advisor before making any investment decisions.
