Morgan Stanley believes the worst phase for Indian equities may be behind us, with signs of earnings growth acceleration now visible. The brokerage notes that valuations and investor sentiment, which were stretched to extremes, are easing, creating room for a healthier market performance. This sets the stage for a potentially strong year ahead for India’s stock market.
The long‑term growth story of India remains intact, even as debates around artificial intelligence continue. Morgan Stanley highlights that domestic cyclical sectors are likely to outperform defensives and external‑facing industries. In its sectoral strategy, the firm is overweight on financials, consumer discretionary and industrials, while keeping a cautious stance on defensives.
According to the brokerage, India’s corporate earnings pipeline looks promising, supported by macroeconomic stability and rising private investments. With domestic demand strengthening and policy support in place, the outlook for equities appears favourable.
Morgan Stanley’s confidence reflects its view that India is entering a new phase of growth where cyclical sectors will lead the rally. While risks from global uncertainties and commodity prices remain, the overall structural story of India continues to attract investors. The firm expects that the combination of earnings recovery, stable valuations and strong domestic participation will drive markets higher in the coming year.