Japan’s Finance Minister Signals Alignment With BOJ as Rate Hike Speculation Grows 
South Korea Posts Stronger-Than-Expected 1.3% Economic Growth in Q3 
Dollar Slips as Weak U.S. Manufacturing Data Increases Pressure for Fed Rate Cuts 
Japan’s Service Sector Sustains Growth Momentum in November 
Oil Prices Rise as Geopolitical Tensions and Supply Risks Intensify 
BOJ Governor Ueda Highlights Uncertainty Over Future Interest Rate Hikes 
RBA Signals Possible Rate Implications as Inflation Proves More Persistent 
Trump Administration Plans Major Rollback of Biden-Era Fuel Economy Standards 
U.S. Futures Steady as Rate-Cut Bets Rise on Soft Labor Data 
China’s Services Sector Posts Slowest Growth in Five Months as Demand Softens 
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Gold Prices Steady as Markets Await Key U.S. Data and Expected Fed Rate Cut 
Asian Markets Mixed as Fed Rate Cut Bets Grow and Japan’s Nikkei Leads Gains 
Oil Prices Slip as Russia-Ukraine Peace Hopes Fade and Oversupply Fears Grow 
South Korea Inflation Edges Up in November as Food and Service Costs Climb 
U.S. Cyber Monday Online Sales Surge Past $9.1 Billion as Holiday Shopping Momentum Builds 
Asian Currencies Steady as Markets Await Fed Rate Decision; Indian Rupee Hits New Record Low 
India’s equity market remains the top choice among emerging economies, with Morgan Stanley forecasting a 14% increase in the Sensex by 2025. Supported by economic stability and strong earnings, the market promises growth amid global uncertainties.
India’s Sensex Targets 14% Growth by 2025, Morgan Stanley Says
According to Morgan Stanley's base case, the benchmark BSE Sensex could see a 14% increase by December 2025, making India's stock market the go-to place for emerging market investors, Investing.com reports.
Despite global growth risks and near-term challenges, India stands out due to its fundamentals, which include strong domestic inflows, stable macroeconomic conditions, and healthy earnings growth.
“With strong earnings, macro stability and domestic flows, it is hard to argue against India's investment case,” according to the analyst.
A stable inflow of non-portfolio foreign currency, a policy that targets inflation with some leeway, and better terms of trade all work to India's advantage.
Macroeconomic Stability and Premium Valuation
Due to these reasons, India's beta to emerging markets is now approximately 0.4, which supports its premium value.
India is poised to take advantage of a private capital investment cycle, deleveraging of corporate balance sheets, and a structural growth in discretionary consumption, with earnings forecast to expand at an annual rate of 18-20% over the next four to five years.
Equity valuations are supported by a steady supply of domestic risk capital, which keeps local demand for equities strong and reduces the impact of external volatility.
Long-Term Growth Fueled by Private Investment
In their base case analysis, Morgan Stanley assumes that government spending cuts would be maintained, private investment will increase, and the real growth-to-interest rate gap will remain favorable.
Expected drivers of Sensex earnings compounding at 17.3% annually until FY27 are stable oil prices, no U.S. recession, and minor interest rate reductions. Even for this time frame, the brokerage's prediction is 15% higher than the consensus.
Since the COVID years, the Indian market has been dominated by macro forces, but now it's shaping up to be a stock pickers' market.
Cyclical Sectors and Small Caps Highlight Strategy
Financials, consumer discretionary, industrials, and technology are cyclicals, thus Morgan Stanley recommends being overweight in those areas and underweight in others.
Investors are putting their faith in domestic economic drivers by favouring small and mid-cap equities over large caps.
