Synopsis
A recent report by Morgan Stanley indicates India as a top equity market, benefiting from resilient macroeconomic conditions and effective stimulus measures.Key Takeaways
- Morgan Stanley highlights India as a preferred equity market.
- Resilience supported by stimulus measures.
- Overweight recommendations for several Asian markets including India.
- Positive outlook on Financials earnings across multiple regions.
- Low beta helps India outperform during market selloffs.
New Delhi, April 16 (NationPress) A report from Morgan Stanley released on Wednesday highlighted that India is among their top equity markets, where macroeconomic conditions remain resilient and adequately supported by stimulus.
The global brokerage noted that in the current 'Brave New World' scenario, influenced by the new US administration, their core recommendation continues to be an overweight (OW) position in domestic markets like India, Japan, Singapore, and the UAE, among others.
“We are updating our APxJ/EM Market Allocation framework as well as our recommendations for the Major 15 APAC/EM markets. Our favored markets in Asia Pacific include India and Singapore, while the Philippines has also been upgraded to OW due to strong valuation support,” stated Morgan Stanley.
“We remain cautious regarding Taiwan and New Zealand, while we have lessened our underweight stance on Korea and adopted an equal weight (EW) position on Australia,” the report indicated.
India and Australia have moderate levels of exports and total revenues from US-listed equities, primarily in the sectors of Healthcare, IT Services (India), and Industrials (Australia).
The brokerage forecasts a robust outlook for financial earnings, citing strong capital ratios and asset quality across most covered sectors.
“We have a favorable view on Financials in markets like Singapore, India, Chile, the UAE, and Japan,” they added.
For the most defensive positioning, they recommend seeking markets with high domestic exposure in economies where macro conditions are viewed as resilient or effectively supported by stimulus measures. This includes India (75 percent domestic), the Philippines (91 percent domestic), and Malaysia (68 percent domestic), contrasting with a more cautious outlook on domestic growth in Indonesia and Thailand, according to the report.
In another report released on Tuesday, Morgan Stanley noted that India's low beta is significantly aiding its outperformance during the global selloff, even with the index potentially reaching multi-month lows.
Key catalysts specific to India include ongoing dovish measures from the RBI, stimulus from GST rate reductions, and a trade agreement with the US. Morgan Stanley also anticipates lower food inflation and oil prices, keeping both food and non-food inflation at manageable levels.
