Morgan Stanley predicts potential volatility in Indian equities in 2024 due to general elections and macro uncertainties. Despite this, the investment case for India remains strong with stable earnings, macro conditions, and domestic investment.
Factors supporting India's resilience include robust macroeconomic stability, expected 20% annual earnings growth, and a reliable source of domestic capital.
The brokerage firm anticipates equity growth leading up to the 2024 elections but notes possible volatility if the ruling party loses in key states or if oil prices surge. Morgan Stanley recommends investing in domestic cyclicals for capex-driven growth, favoring sectors like finance, consumer, and industry cyclicals.