Strong performance in the beauty and personal care (BPC) segment, margin gains, and expectations of a breakeven in the fashion business lifted sentiment for FSN E-Commerce Ventures (Nykaa). The consumer technology platform's stock rose 7.5 per cent on Friday, extending gains over the past week to more than 17 per cent. Most brokerages have upgraded the stock following its third-quarter (October-December/Q3) performance and higher profit expectations ahead.
The risk-reward for the Indian markets, Morgan Stanley said, is turning favourable.
After the massive sell-off since October, foreign portfolio investors (FPIs) are no longer the biggest non-promoter-shareholders in top Indian companies. This has happened for the first time in over a decade. "At 25.6 per cent ownership of India's largest 75 companies, domestic investors are now larger holders than FPIs for the first time since 2010," said Morgan Stanley strategists Ridham Desai, Sheela Rathi and Nayant Parekh in a note.
The general elections in April/May 2024 are expected to add volatility to the Indian markets, keeping investors on their toes.
The outcome of the general elections, the Morgan Stanley note says, has enough firepower to sway the markets on either side.
ITC's move to demerge the hotel business into a new entity, ITC Hotels Ltd, is a step in the right direction and will allay investor's concerns on the company's capital allocation strategy in the medium-to-long term, said analysts at Morgan Stanley in a note. According to the company, the board of directors has approved in principle the demerger of the hotels business, wherein ITC will hold a 40 per cent stake in the new entity, and the remaining 60 per cent will be held directly by shareholders. The scheme of arrangement shall be placed for approval of the Board at its next meeting to be convened on 14th August 2023.
The brokerage believes the economic growth cycle is not fully priced in. It has revised upwards the earnings per share (EPS) estimate for Sensex.
The bull run in the Indian equity markets is intact, said analysts at Morgan Stanley in a recent note. They expect the S&P BSE Sensex to hit 80,000 levels by December 2023 in their bull-case scenario, to which they have assigned a 30 per cent probability. From the current level, this translates into an upside of nearly 29 per cent.
Many years during which monsoons were poor saw high returns, while normal or excess rainfall has also coincided with poor calendar year gains.
Despite headwinds, it remains "structurally bullish" on India and expects the Sensex to scale up to the 70,000-mark by December 2022; 80,000 level in a bull-case scenario and hover around the 50,000-mark as a bear-case, the brokerage house said in a report.
In a bull-case scenario it sees the Sensex at 61,000 levels, while it's bear case scenario pegs the Sensex at 41,000 levels by December 2021.
Morgan Stanley attributes the strength in the domestic rally to local flows.
Portfolio returns, say analysts at Morgan Stanley, are more likely to be driven by bottom-up stock-picking rather than top-down macro forces.
These include increasing the public float in listed companies to 35 per cent from 25 per cent, increasing the minimum statutory limit for FPI investment in a firm from 24 per cent to the sectoral foreign investment, and lowering government holding in listed public sector undertakings.
Morgan Stanley removed banking stocks from its model portfolio when it slashed its weighting on the sector by 500 basis points. Several foreign brokerages, such as UBS, JP Morgan, and Credit Suisse, of late, have also become less optimistic about banking stocks.
Morgan Stanley says the Indian market's performance would depend on policy action.
Coalition governments aren't necessarily a negative for the economy, though they can result in negative outcomes in the stock market if not already priced in before elections.
The best-case scenario -- to which Morgan Stanley attaches 30 per cent probability -- pegs the S&P BSE Sensex at 41,500 levels in the next 12 months.
Even though stocks may remain volatile in the run-up to the polls, as political parties stitch up alliances, the long-term trajectory for the markets remains bullish.
If the rupee falls further, it would negatively impact the dollar-based returns of foreign investors, and could influence foreign flows into India.
A first in 7 years, the combined institutional investor flow stands at Rs 69,000 crore in 2016-17
Global events will continue to be in the limelight, besides domestic policy.
Wonder why corporate India is showering dividends?
Although the markets could see a knee-jerk reaction, they rule out a sharp fall.
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