Daijiworld Media Network - Mumbai

Mumbai, Oct 3: Global brokerage Morgan Stanley has turned bullish on India’s growth cycle, forecasting that both earnings and market peaks lie ahead. The firm believes investors are overlooking a major structural shift in the Indian economy, prompting a reorientation of its portfolio toward domestic cyclicals.

Under its ‘Gunning for Growth’ theme, Morgan Stanley has adopted an overweight stance on financials, consumer discretionary, and industrials, while taking an underweight position on energy, materials, utilities, and healthcare. The brokerage notes that global growth slowdowns and geopolitical risks could pose challenges, but India’s relative performance is expected to improve as the recent slowdown reverses.

Morgan Stanley highlighted several structural factors supporting higher market valuations, including improved macroeconomic stability, a falling share of oil in GDP, rising services exports, fiscal consolidation, and lower inflation volatility. These elements, combined with structurally lower real interest rates, create a high-growth, low-volatility environment, providing a strong case for market re-rating.

The brokerage also pointed to a macro-policy shift toward growth, driven by recent rate and CRR cuts, government capital expenditure front-loading, and GST rate reductions aimed at boosting consumption. Anticipated positive earnings revisions, further RBI rate cuts, potential policy reforms, and a possible India-US trade deal could act as additional catalysts.

With Foreign Portfolio Investor positioning at all-time lows, Morgan Stanley sees significant scope for renewed inflows, underlining its confidence in India’s long-term growth trajectory and market resilience.