“We believe emerging markets are benefiting from a relatively more benign world vs. 2022, and India’s relative valuations imply that its recent underperformance may continue for a few more weeks. India’s relative fundamentals in terms of earnings growth remains strong,” said De
While recommending investors to adopt a barbell portfolio strategy, he said correlations across stocks are well below lows, so the market is transitioning to a stock pickers’ one.
The brokerage is overweight on financials, technology, consumer discretionary and industrials and underweight all other sectors. In its model portfolio, Morgan Stanley has increased weightage on its top bet financials by 600 basis points to 25.2%.
“Peaking short rates, higher credit growth, and peaking credit costs imply outperformance for Financials, especially for the non-bank lenders,” it said.
As part of its barbell strategy, it has also raised weightage on tech stocks by 300 bps to 15.7%.
In case of consumer discretionary stocks, Morgan Stanley expects a recovery in rural demand to aid overall consumption demand. Key upside risk is falling raw material costs and downside risk is slower urban growth. Focus ListMorgan Stanley has 10 stocks on its focus, list — , , , , , , l&t, and — with overweight ratings.
Sensex TargetThe brokerage firm’s Sensex target of 68,500 implies upside potential of 13% by December 2023. This level suggests that the Sensex will trade at a trailing P/E multiple of 20.5x, ahead of the 25-year average of 20x. The premium over the historical average reflects greater confidence in medium-term growth, it said.”We assume no major up move in commodity prices especially oil and fertilizer (either due to China reopening or the conflict in Ukraine), stable domestic growth as per our forecasts, The US does not slip into a recession, RBI exits at 6.5% repo and government policy remains supportive via strong infrastructure spending,” Desai said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)