New Delhi [India], January 5 : Morgan Stanley expects India to be among the best-performing emerging markets in 2025. With strong earnings, macro stability and domestic flows, the global investment banking company argues it is hard to argue against India's investment case.
Against that backdrop, Morgan Stanley has given an "overweight" rating to ten companies' in what it referred to as a "focus list".
Those companies are Brainbees Solutions, Maruti Suzuki, Trent, Reliance Industries, ICICI Bank, SBI Life Insurance, Hindustan Aeronautics, Larsen and Toubro, Infosys, UltraTech Cement. Morgan Stanley is overweight on financials, consumer discretionary, industrials and technology.
In financial market parlance, going by definition, an overweight rating on a stock means that an analyst or an advisory firm believes the company's stock price will perform better in the days to come.
The robust fundamentals of the Indian economy are underpinned by strong macro stability as a result of improving terms of trade and flexible inflation targeting; estimated earnings growth of about 18-20 per cent annually over the next 4 to 5 years, rise in discretionary consumption, among others, said Morgan Stanley.
The report also listed a few catalysts of Indian economic growth.
"The Maharashtra elections have put to rest concerns market participants may have had about the Central government's ability to undertake reforms," said the Morgan Stanley report.
Infrastructure spending, restructuring of GST rates, direct tax reforms, more free trade agreements and focus on energy transition are other catalysts.
In 2025, Morgan Stanley sees an 18 per cent upside in BSE Sensex in the base case scenario.
"We assume continuation in India's gains in macro stability via fiscal consolidation, increased private investment and a positive gap between real growth and real rates. Robust domestic growth, no recession in the US and benign oil prices are also part of our assumptions," the report read.
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