India one of preferred markets with resilient macro conditions: Morgan Stanley

According to the global brokerage, in the ‘Brave New World’ dynamic that has been in the driving seat early on in the new US administration, among the larger markets, “we keep our core recommendation of overweight (OW) domestic India, domestic Japan, Singapore and the UAE” among others.

“We update our APxJ/EM Market Allocation framework, as well as our Major 15 APAC/EM market recommendations. In Asia Pacific, our preferred markets remain India and Singapore, while Philippines also moves up to OW given valuation support,” said Morgan Stanley.

“We remain most cautious on Taiwan and New Zealand, while we reduce the underweight on Korea and move to an EW stance on Australia,” it added.

India and Australia also have moderate levels of export and total revenues in listed equities from the US, largely concentrated in Healthcare, as well as IT Services (India) and Industrials (for Australia).

The brokerage sees a relatively resilient outlook for Financials earnings, with capital ratios and the asset quality outlook in a strong position across most of its coverage.

“We particularly like Financials in Singapore, India, Chile and the UAE, as well as Japan,” it added.

For the most defensive recommendations, “we would advise looking for markets with the most domestic exposure in economies where we see macro conditions as resilient or sufficiently buffered by stimulus”.

This includes India (75 per cent domestic), Philippines (91 per cent domestic) and Malaysia (68 per cent domestic), while in contrast, “we are cautious on domestic growth in Indonesia and Thailand”, said the report.

According to another Morgan Stanley report that came out on Tuesday, India's 'low beta' is helping it to significantly outperform amid the global selloff, even while the index could reach multi-month lows.

Key India-specific catalysts include continuing dovish actions from the RBI, stimulus through GST rate cuts and a trade deal with the US. Morgan Stanley also sees lower food inflation and lower oil prices, keeping food and non-food inflation at benign levels.

—IANS