India's longest bull market has more room to run - Morgan Stanley
Trending Articles- Gold Price Forecast: Gold May Break $4,500 as Fed Rate-Hike Expectations Continue to Cool
- Gold gains momentum to near $4,400 as Fed hike expectations drop despite Us-Iran tensions
- US Treasury Department to buy back more longer-term bonds
- Gold Price Forecast: Will Gold Rise or Fall in the Short Term as Fed July Minutes Approach?
- Gold Price Forecast: US Treasury Yield Slump Pushes Gold Above $4,500, Will Gold Keep Rising?
- Australian Dollar gains as US Dollar struggles amid fading Fed rate hike bets
Investing.com -- India's stock market has entered its longest bull run, surpassing the 2003-08 rally in duration but have delivered only a third of its cumulative returns. Morgan Stanley (NYSE:MS) analysts believe the current market, marked by low volatility and strong relative gains against emerging markets, still has room to grow.
The ongoing rally, which began in March 2020 during the pandemic's early uncertainty, has been supported by several macroeconomic factors and structural shifts.
Key factors driving the next phase include a declining primary deficit, democratisation of investing and credit, robust consumption, improved social equity with higher female workforce participation, and an energy boom.
Morgan Stanley views current market valuations as reasonable, given that the earnings cycle is only midway.
India's nominal GDP is expected to grow by 10-11% annually over the next five years, with corporate earnings likely compounding at 18-20%. Improving corporate balance sheets, rising private investments, and favourable external dynamics, such as reduced oil dependence, bolster the earnings outlook.
Morgan Stanley favours cyclicals over defensives, highlighting financials, consumer discretionary, industrials, and technology as preferred sectors. Whereas sectors like Consumer Staples, Utilities, and Healthcare are expected to underperform.
The bull market is transitioning from macro-driven growth to stock-picking opportunities, Morgan Stanley said.
Small and mid-cap stocks, which have recently underperformed, are set to regain momentum. Emerging themes include private capital expenditure in areas like energy mobility, defense, and semiconductors, alongside traditional industries like cement and real estate.
India’s improving macroeconomic stability and structural reforms suggest its equity market still has potential for further gains, with Morgan Stanley emphasizing the importance of sectoral and thematic plays to navigate the next leg of the rally.
Read more
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
