A Morgan Stanley report released on Wednesday identified India as one of its top equity market picks, citing resilient macroeconomic conditions and adequate stimulus support.
In the context of the “Brave New World” dynamic shaping the early phase of the new US administration, the global brokerage said, “Among the larger markets, we maintain our core overweight (OW) recommendations on domestic India, domestic Japan, Singapore, and the UAE,” among others.
“We remain most cautious on Taiwan and New Zealand, while we reduce the underweight on Korea and shift to an equal weight (EW) stance on Australia,” it added.
India and Australia have moderate levels of exports and total revenues in listed equities from the US, mainly concentrated in healthcare and IT services (India) and industrials (Australia).
The brokerage sees a relatively resilient outlook for financials earnings, supported by strong capital ratios and a positive asset quality outlook across most of its coverage.
“We particularly like financials in Singapore, India, Chile, the UAE, and Japan,” the report said.
For the most defensive recommendations, the firm advises focusing on markets with high domestic exposure and economies where macro conditions are seen as resilient or sufficiently buffered by stimulus. This includes India (75% domestic), the Philippines (91% domestic), and Malaysia (68% domestic). In contrast, the report expressed caution on domestic growth in Indonesia and Thailand.
According to another Morgan Stanley report released on Tuesday, India’s “low beta” is helping it significantly outperform amid the global selloff—even as the index may approach multi-month lows.
Key India-specific catalysts include continued dovish actions from the RBI, stimulus through GST rate cuts, and a potential trade deal with the US. Morgan Stanley also sees lower food inflation and declining oil prices keeping both food and non-food inflation at benign levels.
IANS
