Morgan Stanley: Indian equities to recover lost ground in 2025: Morgan Stanley

Mumbai: Morgan Stanley said Indian equities look attractive citing that its sentiment indicator is in ‘strong buy’ territory. The brokerage said the existing conditions make it a stock picker’s market, in contrast to a more broad-based one since the Covid. It said a global recession or a near recession could keep Indian equities off highs in 2025.

“India’s fundamentals appear to be improving after a soft patch whereas share prices are materially lower,” said Morgan Stanley in a note on Save for negative global developments, this could be a turning point for stocks for the rest of 2025.”

The Sensex and Nifty are down over 14% since late September-when the sell-off in domestic equities began.

The brokerage said a likely positive shift in fundamentals is not in the price and it expects Indian equities to recover the lost ground against its peer group through the rest of 2025.

“The market has ignored the Reserve Bank’s policy pivot, and a strong budget from the government, among other positive developments since early February,” said the firm.

“India’s low beta characteristic makes it an ideal market for the uncertain macro environment that equities are dealing with.”Morgan Stanley prefers cyclicals over defensives and small-caps and mid-caps over large-cap stocks. It is overweight on financials, consumer discretionary, industrials and technology sectors.