morgan stanley research report on india

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‘how india has transformed in less than a decade’: morgan stanley analysis of modi government reforms.

MG Chandrakanth

Prof MG Chandrakanth, Retired Director, ISEC, Bengaluru, did doctoral studies in Agricultural Economics from the University of Agricultural Sciences, Bangalore and post doctor al studies in institutional economics of groundwater irrigation as a Ciriacy Wantrup fellow in the University of California, Berkeley. He specialized in resource and environmental economics and policy in general and groundwater resource economics and policy in particular and authored the book - Water Resource Economics published by Springer, 2015. He also specializes in Agricultural Economics, Production Economics, valuation of externalities and role of sacred groves in natural resource conservation. He served as Professor and Head of the Dept of Agricultural Economics and as Dean, at University of Agricultural Sciences, Bangalore. LESS ... MORE

Morgan Stanley report (May 29, 2023) analysed the economic transformation of India from 2013 to 2022 drawing implications on the economy and the market of relevance to investors. The purpose is to critically analyse contribution of Modi Government to India’s economic transformation as under:

Reduction in corporate tax from 23% to 15% on par with competing economies is to attract corporate investments to generate income and employment. The fillip to infrastructure is visible in National highways from 25700 Kms to 53700 kms; Broadband subscription from 58.9 million to 771.3 million; Renewable electricity from 25.7 GW to 95.7 GW, Railway routes electrified from 4100 kms (6.3% of the total)  to 28,800 kms (42.3% of the total). There has been rise in GST collections from ₹ 97,555 Cr in FY19 to ₹ 18.10 lakh Cr in FY23 registering growth of 12.3% between FY19 and FY23 as against growth rate in the nominal GDP of 9.8% in this period. This is remarkable as the rate of growth in GST is higher than the growth rate of GDP by 25%.

Digital transactions which formed 4.4% of GDP in FY16 increased to 76.1% in FY23, a remarkable indicator of formalization of the economy. The introduction of Real Estate (Regulation and Development) Act formalized contract between buyers and builders, making the builder to keep at the most 10 %  of the cost of the building as advance depositing 70% of the value i n a  separate bank account w hich can only be withdrawn based on project completion certified by civil engineer, architect and chartered accountant. The new launches increased from 50,000 units in 2015 to 79,000 units in 2023.

Upon identification of the beneficiaries of Governmental schemes / programmes, the benefits are directly transferred electronically using JAM linkage. The DBT in cash increased from ₹5 Bl in FY14 to ₹250 Bl in FY23 from 50 schemes to 400 schemes and DBT in kind valued from none in FY14 to ₹4000 Bl in FY23. Enacting Insolvency and Bankruptcy Code instilled confidence among investors and buyers since it had the potential to weed out both inefficient and wilful defaulters impacting negatively on Non-Performing Assets. The Impaired Loan Ratio (amount outstanding of impaired loans] / [total outstanding loan portfolio] was 2% in FY15 and 5% in FY23.

The corporate debt as % of GDP was 62% in FY15 and fell to 50% in FY23 is another visible improvement. On the inflation front, Consumer Price Index ranged from 8 to 12% YoY for 2009-14 and reduced to 6-7% for 2015-23. The policy rate (of RBI) ranged from 7.9% in Aug 2007 to 6.5% in May 2023, while that in the US ranged from 5% in Aug 2007 to 5.126% in May 2023.  In addition, there has been decoupling of federal and RBI policy rate hike cycle. The Gross Foreign Direct Investment increased from 10 Bl USD in 2005 to 400 Bl USD in 2023. The Corporate profits were ably supported by the economy as the nominal GDP and Earnings indexed to 100 are moving together. India’s share in world services exports, increased from 1.6% in Dec 2013 to 4.9% in Dec 2022.  India’s share in world goods export increased from 1.65% in Dec 2013 to 1.8% in Dec 2022.

The macro-economic implications of this economic transformation are visible as under.

Manufacturing output being 74 US Bl $  in FY2012  increased to 447 US bl $s in FY 2022 and is projected to grow to 2001 Bl US $ in FY 2032. Investment as percentage of GDP increased from 28% in FY 2022 is expected to rise to 33% in FY 2033. Thus, manufacturing and capital expenditure is expected to raise steadily. India’s export market share will rise to 4.5% by 2031, nearly twice of the 2021 level, with broad based gains across goods and services exports.

As India’s per capita income increases from USD 2,200 (FY23) to about USD 5,200 by FY 2032, that will have major implications on consumption basket due to raise in the middle class. Inflation is expected to remain benign and less volatile with shallower rate cycles leading further to benign equity market cycles. Share of profits in GDP has doubled from 2020. Given supply-side reforms, rise in investments is expected with a moderation in current account deficit and increase in credit to GDP to support profit growth. The lower share of foreign portfolio (FPI) in current account funding has reduced stock market’s negative return correlation with oil prices, especially when oil prices rise due to supply disruption. This reflects lower correlation with oil prices. With reduction in India’s reliance on global capital market flows, market’s sensitivity to a US recession and US Fed rate changes seems to be fading. This reflects lower correlation with US recession. As a consequence of improved macro stability and reduction in dependence on global capital market flows to fund the CAD, India’s beta to EM has fallen to 0.6.

Expectation

The nominal GDP rose at CAGR of 5.7% from US$ 1826 Bl in FY12 to US$ 3,174 Bl in FY22 and is expected to rise at CAGR of 9.6% to US $ 7,903 Bl in FY32. The nominal GDP per capita rose at CAGR of 4.5% from US$1,460 in FY12 to US$ 2,278 in FY22, and is expected to rise at CAGR of 8.7% to reach US$ 5,242 in FY32. The total retail market of $461 Bl in FY12 growing at CAGR of 5.4% reaching $781 Bl in FY22 is expected to grow at CAGR of 8.9% to reach $1,834 Bl in FY32 (Fig below). The report is a tribute to the efforts of PM Modi as India is expected to emerge as a key driver for Asia and Global growth. The key risks facing Indian economy however are global recession,  fragmented general election outcome in 2024, rise in commodity prices due to supply outages and shortages in skilled labour.

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India transformed in less than a decade; different from 2013: Morgan Stanley report

ANI | Updated: May 31, 2023 11:37 IST

New Delhi [India], May 31 (ANI): In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook , Morgan Stanley Research has said in a report . The report , India Equity Strategy and Economics: How India Has Transformed in Less than a Decade, highlights the 10 big changes, mostly because of India's policy choices, and their implications for its economy and market. "This India is different from what it was in 2013. In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook . We present a snapshot of these changes and their implications," the report said. It added, "We run into significant skepticism about India, particularly with overseas investors, who say that India has not delivered its potential (despite its being the second-fastest-growing economy and among the top-performing stock markets over the past 25 years) and that equity valuations are too rich." It added, "However, such a view ignores the significant changes that have taken place in India, especially since 2014." Morgan Stanley's Research had taken these 10 big changes namely, supply-side policy reforms, formalisation of the economy, Real Estate (Regulation and Development) Act, digitalizing social transfers, Insolvency and Bankruptcy Code, flexible inflation targeting, focus on FDI, India's 401(k) moment, government support for corporate profits and MNC sentiment at multiyear high, while filing the report . While drawing the data for supply-side policy reforms, the research has gathered the figures related to India's corporate tax at par with peers and infrastructure.

In 10 years, India's base corporate tax rate has stayed below 25 per cent while for new companies with operations commencing before March 24, it has stayed at 15 per cent. In terms of infrastructure development, the research has taken factors like national highways, broadband subscriber base, renewable energy and railway route electrified. In the formalisation of the economy, Morgan Stanley had taken GST collections, which were showing upward trends over the years, and digital transactions which grew 76 per cent of the GDP. On May 18, Morgan Stanley said India is poised to grow at 6.2 per cent in the current financial year 2023-24 with improving macro stability indicating that the monetary policy will not have to turn restrictive. In a report titled "Asia Economics: The Viewpoint: Addressing the Pushback to Our Constructive View", authored by Chetan Ahya, Derrick Y Kam, Qiusha Peng, and Jonathan Cheung, Morgan Stanley said India enjoys tailwinds -- both cyclical and structurally. "We see healthy balance sheets sustaining the robust trends in domestic demand. Improving macro stability means the monetary policy will not have to turn restrictive, allowing the economic expansion to continue," the report said. (ANI)

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Explained: Why Morgan Stanley backed India, downgraded China

The firm has upgraded india's rating to 'overweight' while downgrading china and taiwan to 'equal-weight.' here's what it means for both countries..

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Leading global brokerage firm Morgan Stanley has made significant adjustments to its ratings for key Asian economies.

The firm has upgraded India's rating to 'overweight' and ranked it in the first position in its basket of Asian emerging markets ex-Japan, while downgrading China and Taiwan to 'equal-weight.'

"India is now the top ranked, most-Dalal Street bleeds for 2nd straight day as Sensex tumbles over 700 pointspreferred market among emerging markets (EMs), rising from the sixth spot, due to supportive foreign inflows, macro stability and positive earnings outlook, the brokerage said in a note late Wednesday," Morgan Stanley said. Also Read Fitch raises India’s FY24 GDP growth forecast to 6.3%

This strategic shift reflects Morgan Stanley's assessment of the respective countries' economic prospects in the Asian landscape, which seem to be transforming as China continues to lose its dominance.

India’s moment

Morgan Stanley's decision to upgrade India's rating to 'overweight' is based on several factors. The firm believes that India's reform and macro-stability agenda support a robust capital expenditure and profit outlook.

“Relative valuations have become less extreme compared to last October, contributing to this meteoric rise,” said Morgan Stanley in its report. This indicates that India’s investment environment has become far more favorable.

The report also highlighted India's potential for sustained superior USD earnings-per-share (EPS) growth compared to other emerging markets.

This potential is driven by India's young demographic profile, which is expected to drive equity inflows further, it added.

Moreover, the firm noted the positive trends in foreign direct investment (FDI) and portfolio flows into India. These trends are bolstered by the country's commitment to reforms and macroeconomic stability, making it an attractive destination for global investors.

Morgan Stanley has also upgraded specific sectors in India, such as industrials, financials, and consumer discretionary stocks, to 'overweight'.

China downgraded

On the other hand, Morgan Stanley expressed concerns about China's economic outlook, leading to its downgrade to an 'equal-weight' rating. The analysts advised investors to be cautious and take profits amid the recent rally driven by government stimulus packages.

The firm pointed out that China’s easing of measures is expected to be gradual and may not be sufficient to sustain the gains in the stock market. It also highlighted several areas that need significant improvement, such as local government financing vehicle (LGFV) debt, the property and labor markets, and geopolitical factors.

China's loss could be India's gain

Morgan Stanley's upgrade of India's rating and downgrade for China are related to investment opportunities in markets, but the assessment comes at a time when the former is taking massive strides toward becoming a global manufacturing hub.

Several major companies, including Apple and Foxconn, have already started operations in India, in what seems to be a move aimed at diversifying operations beyond China.

Electric vehicle maker Tesla is also in talks with the Indian government to start local manufacturing in India soon.

This reflects the government's efforts to increase exports, provide incentives, and reduce the cost of doing business in India. Therefore, the country could become a perfect replacement for China for global companies who are looking to diversify operations. Published By: Koustav Das Published On: Aug 3, 2023

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India's GDP growth to moderate to 6.5% in FY25, projects Morgan Stanley

Morgan stanley research's report said that it maintained a constructive outlook on the indian economy, while highlighting that risks emanate from global factors and elections in may 2024.

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First Published: Feb 21 2024 | 5:37 PM IST

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Morgan Stanley’s report on India is an exercise in cherry-picking

A fundamental skill needed to be an investment manager or stockbroker is the ability to talk up future prospects of the economy one operates in. Common sense suggests that fund managers should talk up the prospects of specific stocks, but that doesn’t happen often because many fund managers aren’t allowed to do that. Also, if the idea is to attract investments from foreigners — who are more interested in making a country-level allocation than investing in specific stocks — it makes more sense to talk up economic prospects.

So, it’s hardly surprising that many reports on India have been published over the years in which the future prospects of the economy are talked up to make a case for investing in stocks. This formula has been followed for two decades now.

One such report, published recently by Morgan Stanley Research (MSR), states that India has transformed in less than a decade. It builds its case by highlighting 10 big changes in the Indian economy, while cherry-picking data and leaving out nuance.

Take the gross foreign direct investment (FDI) coming into India, which the report shows as an upward sloping curve. The gross figure doesn’t take into account the repatriation/disinvestment that happens every year. It also doesn’t take into account the increasing size of India’s economy. Once we do that, the figure for 2022-23 stands at 1.2% of GDP, having peaked at 3.5% in 2008-09. In the past 10 years, it has ranged from 1.2% to 2.1%.  

A case is made for how India’s corporate income tax rate is now in line with that of its peers. In fact, corporate income tax collections peaked at 3.9% of GDP in 2007-08 and fell to 3.5% in 2018-19, the year before the pandemic struck. The ratio was at 3% in 2021-22 and 3.1% in 2022-23.

The post-2019 fall in corporate tax collections has been due to the cut in the corporate income tax rate in September 2019. Here’s the thing: the corporates have earned windfall profits post-2019 because of lower interest rates and increasing economic formalisation.

Indeed, the sample of more than 30,000 companies, both listed and unlisted, tracked by the Centre for Monitoring Indian Economy suggests that from 2018-19 to 2021-22, total sales went up 21%. Profit after tax — thanks to lower tax rates and lower interest rates — rose by a whopping 237%. In comparison, tax provisions of these companies increased just 37%. Clearly, the corporate tax-rate cut has come at a great cost, with individuals having to make up for it by paying more tax.

Another point made in the report is that inflation has been lower post-2014. That’s true. Nonetheless, in 2011-12, 2012-13 and 2013-14, the average price of the Indian basket of crude oil was more than $100 per barrel, which hasn’t happened since. A mention of this was necessary.

Then there is that favourite of fund managers – the huge amount of money coming into mutual funds (MFs) through systematic investment plans (SIP). In the past few years this has been an upward sloping curve, with the amount of money being invested into MFs through SIPs rising every year. The MSR report cites this upward sloping curve as another example of something that has changed in the past few years.

In 2016-17, investments through SIPs averaged ₹ 3,660 crore a month. By 2022-23, they had jumped to ₹ 13,000 crore a month. MSR calls this India’s ‘401(K) moment’ to make the data more palatable to a US audience.

The trouble is that nuance has gone missing again here. Investors make money through SIPs only if they hold on to their investments for a while. Nonetheless, as a recent consultation paper published by the Securities and Exchange Board of India (Sebi) pointed out, only 3.1% of the MF units that investors redeemed in 2022-23 had been held for more than five years. In 2021-22 this was 2.6%. More than half of MF units are redeemed within a year of investment.

This clearly tells us that while investors are investing through SIPs, they are not holding on to their investments for long enough, meaning that equity investing will eventually turn out to be disappointing for them. The MSR report doesn’t get into these details.

Of course, like every other report these days, MSR’s points out how Indians have taken to digital payments like fish to water. While this suggests convenience for consumers and better data for the government and financial firms, it in no way suggests an increased ability to consume things. Most of these transactions are of low value and were already happening in cash.

There is also no mention of the K-shaped economic recovery after the pandemic. Two-wheeler sales in 2022-23 were similar to those in 2014-15. While the sale of entry-level cars has crashed, there are waiting periods for SUVs. Airline travel in 2022-23 almost recovered to pre-pandemic levels, but non-suburban rail travel was 29% lower than in 2018–19.

Sluggish rural consumption finds no mention either.The volumes of FMCG companies – the number of units of various products sold by these companies – has not been looking good for a while. As Ritesh Tewari, chief financial officer of Hindustan Unilever, said in a 27 April earnings call : “We need to be mindful that FMCG market volumes have been declining for almost a year and a half. Rural market volume is still declining."

Then there is the case of work demanded under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), India’s work guarantee scheme. Last month 31.74 million households demanded work under it – more than has ever been demanded in the month of May, except in 2020, just after the pandemic broke out.

In fact, the work demanded by households during April-May has been the highest ever for the first two months of a financial year – even higher than in April-May 2020. This is yet another indicator of the K-shaped economic recovery that India is currently experiencing.

Further, direct-benefit transfers to the population have gone up over the years. This spending stood at ₹ 3.82 trillion or 1.9% of GDP in 2019–20. It has since jumped to ₹ 6.67 trillion or 2.45% of GDP in 2022–23. This increase again indicates that the financial situation of many Indians is precarious.

Interestingly, the report has a chart showing the money invested by foreign portfolio investors (FPIs) in Indian stocks and debt. FPIs brought in the most money into India in the years before 2017-18 (Take a look at the accompanying chart). Of course 2020-21, when Western central banks cut interest rates to almost zero, was an exception.

Finally, in 2015-16, India’s agriculture sector was around 4% bigger than manufacturing (in nominal terms). In 2022-23, agriculture was 25% bigger than manufacturing. This despite increasing tariff protection and programmes like production-linked incentives to encourage companies to make in India. The MSR report gives this a complete miss. The history of economic development tells us that no country has gone from developing to developed without moving people away from agriculture into manufacturing. As economist Ha-Joon Chang writes in Bad Samaritans —The Guilty Secrets of Rich Nations & the Threat to Global Prosperity: “History has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and more importantly, where productivity tends to grow faster than agriculture and services."

In India, the opposite seems to be happening. The government’sPeriodic Labour Force Survey also bears this out. The latest annual data is available for the period July 2021 to June 2022. The proportion of the workforce in agriculture has gone up from 42.5% in 2018-19 to 45.5% in 2021-22.

All this leads us to the bigger point: How can any serious report on the Indian economy ignore all this important data? This can only be done when the idea is to cherry-pick to build a narrative and leave out any nuance.

This is not to say that everything is doomed. Not at all. The investment scene seems to be turning around. Bad loans of banks and corporate debt have both come down. Goods and services tax collections have improved thanks to better implementation (and high inflation). Services exports are also looking up.

Indeed, as has happened in the past, the stock market may do well irrespective of how the economy performs. The economy’s rising formalisation might be one reason for this. Second, if central banks in the West go back to a low interest rate policy, money might come pouring in and drive up stock prices like in 2020 and 2021.

Vivek Kaul is the author of ‘Bad Money’.

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India's Transformation: Morgan Stanley's Report

• 03 Jun 2023
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Why in News?

A recent report by Morgan Stanley (global financial services firm) highlights the significant changes that have taken place in India over the past decade.

• The report challenges the skepticism surrounding India's potential and emphasizes the transformative reforms implemented in recent years.
• Morgan Stanley counters global opinions of India's underperformance. It emphasizes India's growth as the second-fastest-growing economy and top-performing stock market.

What are the Key Highlights of the Report?

• Bringing corporate tax at par with other countries.
• Acceleration of infrastructure investment.
• Rising collection of Goods and Services Tax (GST) .
• Implementation of the Insolvency and Bankruptcy Code.
• Introduction of flexible inflation targeting.
• Focus on foreign direct investment (FDI).
• Government support for corporate profits.
• Digitalizing Social Transfers.
• Real Estate (Regulation and Development) Act .
• Multi-year high sentiment among multinational corporations (MNCs).
• India’s 401(k) Moment.

Note: India’s 401(k) Moment:

• India’s 401(k) moment is the term used by Morgan Stanley to describe moment refers to the increase in household savings and investments in financial assets, inspired by the US 401(k) retirement savings plan.
• This shift reflects a change in household preferences from physical assets like gold and real estate to financial assets like equities and bonds.
• Key financial assets involved in India's 401(k) moment include mutual funds, insurance, and pension schemes.
• Manufacturing and capital spending as a percentage of Gross Domestic Product (GDP) have consistently risen.
• Export market share is projected to double to 4.5% by 2031(from 2021 level).
• Lower volatility in inflation and shallower interest rate cycles has impacted consumption patterns.
• Anticipated rise in manufacturing and capital spending in GDP.
• Expected broad-based gains in goods and services exports.
• It is expected to clock in at $5,200 within the next decade.
• Structural transformation contributing to a narrower current account deficit (CAD).
• Doubling of profits in GDP, resulting in strong earnings growth.
• There is a possibility of higher valuations for domestic shares, which could lead to increased investment opportunities.
• The demand for stocks within India is expected to remain strong, contributing to sustained growth in the market.
• The stock market may become less influenced by changes in oil prices and the US recession.
• India's beta to emerging markets falling to 0.6, which is a consequence of reduced dependence on global capital market flows.
• Beta is a measure of systematic risk, also known as market risk or non-diversifiable risk. It quantifies how sensitive a stock's returns are to changes in the broader market.
• A beta less than 1 indicates the stock is less volatile than the market.
• Global recession.
• Sharp rise in commodity prices and supply outages.
• Shortages in skilled labor supply.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Q. In the context of finance, the term “beta” refers to (2023)

(a) the process of simultaneous buying and selling of an asset from different platforms (b) an investment strategy of a portfolio manager to balance risk versus reward (c) a type of systemic risk that arises where perfect hedging is not possible (d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market

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India’s exposure to external funding risks has decreased : Morgan Stanley

Us 10-year yields have risen 158 bps since may—their sharpest rise since 2013.

By BL Mumbai Bureau

India’s exposure to external funding risks has decreased with improvement in macro stability indicators, according to Morgan Stanley research report.

US 10-year yields have risen 158 bps since May—their sharpest rise since 2013—and are tracking at 16-year highs. At the same time, Indian 10-year yields have risen only 32 bps, in sharp contrast to 2013.

“The impact of higher US rates and/or tighter financial conditions flows mainly through the external balance sheet because India runs a current account deficit. As such, tighter global financial conditions weigh on the trend in capital flows, exposing the economy to external funding risks with resultant implications for domestic liquidity and/or financial conditions,” the report said.

The current account deficit (on a four-quarter trailing basis) has remained at or below 2.5 per cent of GDP since March 2014. It stood at 1.7 per cent of GDP as of June 2023 against 5 per cent of GDP as of June 2013.

Improved funding mix

FDI flows accounted for 47.5 per cent of capital flows in FY23 against 22.2 per cent in FY13. Other external stability indicators have also improved.

Import cover remains robust at 10.7 months and external debt has declined to 18.6 per cent of GDP as of June 2023 against 21.8 per cent of GDP as of June 2013.

“Inflation differentials between India and the US have narrowed, which also means that the real rate differential (on 10-year yields) is at 270 bps as of September 2023 (12-month trailing) vs. -280bps as of September 2013,” Morgan Stanley said.

Policy implications

“In our view, the RBI will remain focused on domestic inflation and growth dynamics as external stability indicators remain in the comfort range. We expect the current account deficit to remain below 2% of GDP in F24/F25e and inflation to moderate to 4.8% in F25e from 5.4% in F24e. As such, we expect the RBI to keep rates steady and focus on liquidity management in the near term. To the extent the inflation outlook is improving and real rates are expected to remain in positive territory, we expect a shallow rate cut cycle from 2Q24,” it added.

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Top Indian Stocks Held By Morgan Stanley – Portfolio Analysis!

by Trade Brains | Sep 26, 2023 | Financials , Portfolio , Stocks | 1 comment

Top Indian Stocks Held By Morgan Stanley : With more than 29 years of experience in India, Morgan Stanley offers both domestic and foreign clients a range of services. The Company employs over 10,000 Indians across its locations and operates a leading institutional securities platform in India that provides a full range of investment banking, capital markets, equities, fixed income, commodities, and derivative products, as well as research.

Over the past few years, Morgan Stanley has also been a prominent investor in public equities, infrastructure, real estate, and private equity projects in India. Here are the 5 Indian stocks in which Morgan Stanley has the highest holdings

Table of Contents

Top Indian Stocks Held By Morgan Stanley

Here are top stocks in which Morgan Stanley has invested, lets took a look at the stock and its fundamentals.

Top Indian Stocks Held By Morgan Stanley #1 – IndusInd Bank

IndusInd Bank Limited (“IndusInd Bank”) offers a range of banking products and services to 34 million people nationwide, including rural markets, NRIs, business owners, corporations, and government and financial institutions. Additionally, it runs in Abu Dhabi, Dubai, and London.

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IndusInd Bank , which was founded in 1994. is currently India’s sixth-largest bank by market capitalization and  is headquartered in Mumbai, India. With 340 million customers, IndusInd Bank operates a group network of 2,606 branches and 2,875 ATMs. The company has about an even split of branches across North, South, East, West and Central Regions. 

IndusInd Bank is the 2nd largest microfinance lender – across 137k villages growing at 5% YoY; total corporate loan book shows consistent growth of 4.2% 5Y-CAGR and 23% YoY. IndusInd Bank has over the years, a stable and safe risk profile of approx.~ 77% of Investment Grade debt and ~23% High Yield Debt.

In FY23, the company’s interest income grew 18% YoY, from Rs. 30,822 crore to Rs. 36,368 crore. Net Profits saw growth of 55% YoY from Rs. 4,805 crore to Rs. 7,443 crore. Net margins during the period expanded 488 bps.  

Top Indian Stocks Held By Morgan Stanley #2 – KEI Industries

KEI Industries Ltd . was established in 1968 to produce rubber cables for home wiring. The business has grown into a market leader in the provision of comprehensive wire & cable solutions.  Extra-high voltage (EHV), medium voltage (MV), and low voltage (LV) power cables for both institutional and retail/housing segments are produced by its 5 manufacturing facilities.

Engineering, procurement, and construction (EPC) services for projects across different industries, as well as the EHV cable segment, have proven successful for the company. Key clients including Power Grid Corp., Delhi Metro, Tata Power, and others have given it numerous institutional projects. As of Q1, Pending orders are valued at Rs. 3,567 crore and L1 order of EHV – Rs. 78 Crore.

KEI has an extensive network of over 1,925 dealers/distributors. It is run by a strong workforce of over 5,300+ employees across various roles. It operates 38 branch offices and 21 warehouses across the nation. The cable manufacturer exports its products to 50+ countries.

In FY23, the company’s revenue grew 21% YoY, from Rs. 5,727 crore to Rs. 6,912 crore. Net Profits saw a growth of 27% YoY from Rs. 376 crore to Rs. 477 crore. Net margins during the period expanded by 35 bps.  

Top Indian Stocks Held By Morgan Stanley #3 -Aarti Industries

Aarti Industries Ltd . (“Aarti Industries”), a division of the Aarti Group with headquarters in Mumbai, produces specialty chemicals & pharmaceuticals with a focus on phenylenediamines, di-chlorobenzenes, nitro toluene value chain, and sulphuric acid & downstream. 

Aarti Industries has more than 100 products, 1,100+ domestic and international clients, and 60 exporting nations as client destinations. Aarti Industries owns and operates 16 manufacturing facilities of which 11 are zero liquid discharge, 4 R&D facilities, and employs a dedicated pool of more than 400 research professionals. In total, the company employs over 6000 persons. 

Among others, their principal clients are BASF, Atul Ltd, Indian Oil, UPL Ltd, Sudarshan Chemical Industries Ltd, and Sumitomo Chemical India. Aarti Industries is one of the top three global players in chlorination and nitration, and it is also one of the top two global players in hydrogenation.

In FY23, the company’s revenue grew 9% YoY, from Rs. 6,086 crore to Rs. 6,619 crore. Net Profits saw de-growth of 54% YoY from Rs. 1,186 crore to Rs. 545 crore. Net margins during the period declined 1125 bps.  

Top Indian Stocks Held By Morgan Stanley #4 -Aarti Pharmalabs

Aarti Pharmalabs Limited primarily engages in the manufacture and sale of active pharmaceutical ingredients (APIs) and pharmaceutical intermediates in India and internationally.

The company’s specialized key verticals include API & Intermediates (43.6%), CDMO & CMO Services (6.3%), Xanthine derivatives & allied products (50.2%). Aarti Pharma is the largest Indian manufacturer of Xanthine derivatives and is is located strategically in the western region with access to ports.

Aarti Pharma was founded in 1984 by first gen technocrats; fast forward 39 years the company has 150+ products, 500+ customers with over 52 patents filed. It employs over 2000 individuals and also has 6 manufacturing units, 3 FDA units, and 3 cutting edge R&D centers. Aarti has received 40 US DMF approvals across multiple therapeutic areas and has 10 new APIs under development.

In FY23, the company’s revenue stood at Rs. 1,511 crore up from 1,199 crore, indicating 26% growth YoY; Net Profits at Rs. 171.13 versus Rs. 106 crore in FY22. Net margins translating to 11.36% versus 10.2% the previous year which is a 116 accretion.

We are at the end of our article, We have seen the top Indian stocks held by Morgan Stanley. Let us know what you think about this in the comments section below

Written by Sandeep R

By utilizing the stock screener , stock heatmap , portfolio backtesting , and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news , and make well-informed investment decisions.

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Morgan Stanley share choice amazing and educative

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Mumbai (Maharashtra) [India], August 13 (ANI): Global index provider Morgan Stanley Capital International (MSCI) has announced the removal of the freeze on Adani Group stocks, a move that comes amid ongoing scrutiny following the Hindenburg Research allegations.

Starting with the August 2024 Index Review, MSCI will implement changes. The adjustments will include updates to the Number of Shares (NOS), Foreign Inclusion Factor (FIF), and Domestic Inclusion Factor (DIF) for Adani Group and associated securities.

According to the announcement, these changes will take effect at the close of August 30 and will be fully implemented by September 2. MSCI clarified that it will also resume the regular implementation of corporate events for these securities from September 2 onwards.

“MSCI clarifies that starting from the August 2024 Index Review, MSCI will implement the index review changes, including changes in the Number of Shares (NOS), Foreign Inclusion Factor (FIF) and Domestic Inclusion Factor (DIF) of Adani Group and associated securities that have been previously postponed. MSCI will also resume the regular implementation of corporate events for these securities effective September 2, 2024. The proforma FIF and DIF for these securities are announced along with the August 2024 Index Review announcement. The changes will be implemented as of the close of August 30, 2024 (effective September 2, 2024),” the statement from MSCI read.

Despite lifting the freeze, MSCI emphasized that it will continue to closely monitor the Adani Group and associated securities, particularly concerning their free float status.

The index provider stated that it would issue further communication if necessary, indicating that the group remains under observation.

In addition to the updates on Adani stocks, MSCI also announced the inclusion of eight new securities in its MSCI India Index. The newly added securities are Bosch, Dixon Technologies India, Oil India, PB Fintech, Phoenix Mills, Rail Vikas Nigam, Vodafone Idea, and Zydus Lifesciences. Notably, no securities were deleted from the index in this review. (ANI)

This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.

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• The probability of a recession now stands at 35%

Key takeaways

• In light of recent economic developments, J.P. Morgan Research has raised the probability of a U.S. and global recession starting before end-2024 to 35%.
• The probability of a recession happening by the end of 2025 remains unchanged at 45%.
• With inflation coming down, J.P Morgan Research now sees a 30% chance the Fed will keep interest rates high-for-long, which is down from 50% two months ago.

After a year of surprisingly strong growth, the U.S. economy is now showing signs of slowing. The July jobs report was softer than expected, with the unemployment rate rising for the fourth straight month — sparking a market sell-off and heightening fears of an impending recession .   

What is the probability of a recession? 

The market outlook at mid-year: A long road to normal

In light of recent economic developments, J.P. Morgan Research has raised the probability of a U.S. and global recession starting before end-2024 to 35% — up from 25% in its mid-year outlook .  “Important elements of our growth forecast are being challenged. U.S. news hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding. The latest business surveys also suggest a loss of momentum in global manufacturing and in the Euro area — weak links in the expansion that we have expected to lift this year,” said Bruce Kasman, Chief Global Economist at J.P. Morgan. “On the other hand, these forces are being tempered by solid continued gains in overall activity, led by the service sector.” As Kasman observed, however, the vulnerabilities associated with a recession — such as sustained profit margin compression, credit market stress, and energy or financial market shocks — are notably absent. “As such, we have only modestly increased our assessment of near-term recession risk to 35%,” he added. Looking ahead, the probability of a recession happening by the end of 2025 remain unchanged at 45%. “While recognizing additional uncertainties related to the political backdrop, we have not altered our assessment of the probability of a recession by the end of next year,” Kasman said. 

Global recession outlook

There is now a 35% chance that the global economy will enter a recession by the end of 2024, and a 45% chance that it will do so by the end of 2025. 

What is the outlook for interest rates? 

With inflation coming down, J.P Morgan Research now sees a 30% chance the Fed will keep interest rates high-for-long, which is down from 50% two months ago. “The modest increase in our assessment of recession risk contrasts with a more substantial reassessment we are making to the interest rate outlook. This is driven by the correlated shifts in growth and inflation risk that are shaking the gradualism narrative in current central bank rate guidance,” Kasman explained. “Specifically, there has been a material positive shift in the risk profile on U.S. inflation as strong supply-side performance combines with moderating labor demand to ease labor market pressure.” U.S. wage inflation is now slowing more than in other developed market (DM) economies, while U.S. unit labor costs are now at a level broadly consistent with the Fed’s inflation target. These easing labor market conditions suggest that the Fed’s current policy stance is restrictive. “Taken together, these developments warrant a break from gradualism and we expect the Fed to make a level adjustment in its policy stance that lowers rates by at least 100 basis points through year-end,” Kasman said. However, these rate cuts might not necessarily be mirrored elsewhere around the world, especially as the risk shift on inflation is U.S.-centric. “Our experience shows that the pass-through of Fed policy changes to other economies is limited in the absence of a synchronized shift in macroeconomic fundamentals and financial market conditions,” Kasman noted. “As a result, there is a good chance that the shift away from gradualism we now expect from the Fed will not be reflected more broadly.” 

“Taken together, these developments warrant a break from gradualism and we expect the Fed to make a level adjustment in its policy stance that lowers rates by at least 100 basis points through year-end.”

Bruce Kasman

Chief Global Economist, J.P. Morgan

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February 09, 2024

Inflation is easing, but will central banks achieve their targets in 2024? J.P. Morgan’s economists share their projections.

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Morgan Stanley Keeps Their Sell Rating on Aptiv (APTV)

Morgan Stanley analyst Adam Jonas maintained a Sell rating on Aptiv ( APTV – Research Report ) today and set a price target of $70.00. The company’s shares closed yesterday at $67.97.

Jonas covers the Consumer Cyclical sector, focusing on stocks such as Tesla, Ferrari, and Rivian Automotive. According to TipRanks , Jonas has an average return of 4.4% and a 49.90% success rate on recommended stocks.

Currently, the analyst consensus on Aptiv is a Moderate Buy with an average price target of $94.85, implying a 39.55% upside from current levels. In a report released on August 8, Piper Sandler also maintained a Sell rating on the stock with a $63.00 price target.

APTV market cap is currently $18.06B and has a P/E ratio of 5.14.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

Aptiv (APTV) Company Description:

Ireland-based Aptiv Plc designs, develops, manufactures and sells vehicle components. The company provides electrical, electronic, and safety technology solutions to the automotive and commercial vehicle markets. It operates through the following business segments: Signal and Power Solutions, Advanced Safety and User Experience.

Read More on APTV:

• Aptiv price target lowered to $100 from $105 at Barclays
• Aptiv files automatic mixed securities shelf
• Early notable gainers among liquid option names on August 1st
• Aptiv sees FY24 adjusted EPS $6.15-$6.45, consensus $6.03
• Aptiv announces new $5B share repurchase plan, $3B ASR

Aptiv News MORE

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Morgan Stanley (MS) Down 7% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Morgan Stanley ( MS Quick Quote MS - Free Report ) . Shares have lost about 7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Morgan Stanley due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Morgan Stanley Q2 Earnings Beat on Robust IB & Trading

Morgan Stanley’s second-quarter 2024 earnings of $1.82 per share handily outpaced the Zacks Consensus Estimate of $1.65. The bottom line also compared favorably with $1.24 per share reported in the prior-year quarter. Morgan Stanley’s IB business rebounded. Advisory fees surged 30% year over year. Further, underwriting fees witnessed solid momentum in the quarter. Specifically, equity underwriting income jumped 56% and fixed income underwriting income was up 71%. So, total IB fees (in the Institutional Securities division) grew 51% to $1.62 billion. We had projected it to be $1.24 billion. The company also posted a solid trading performance. Equity trading revenues increased 18% year over year and fixed-income trading income was up 16%.

Lower provisions were another tailwind for Morgan Stanley. However, despite a 24% increase in interest income, the company’s net interest income (NII) witnessed modest growth due to higher interest expenses. Also, an increase in total non-interest expenses was a headwind. Further, weakness in the wealth management business was a drag. Net income applicable to common shareholders (GAAP) was $2.94 billion, up 44% from the year-ago quarter. Our estimate for the metric was $2.26 billion.

Revenues Up, Expenses Rise

Quarterly net revenues were $15.02 billion, up 12% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $14.18 billion.

NII was $2.07 billion, up 3%. We had projected NII of $1.83 billion. Total non-interest revenues of $12.95 billion increased 13%. Our estimate for the metric was $12.11 billion. Total non-interest expenses were $10.87 billion, up 4%. Our estimate for the metric was $10.34 billion. Provision for credit losses was $76 million, down 53% from the prior-year quarter.

Quarterly Segment Performance

Institutional Securities : Pre-tax income was $2.05 billion, jumping 109% from the prior-year quarter. Our estimate for the same was $1.5 billion. Net revenues were $6.98 billion, up 23% year over year. The upside resulted from increased advisory fees, underwriting income and trading revenues. We had projected revenues of $6 billion. Wealth Management: Pre-tax income totaled $1.82 billion, up 8% year over year. Our estimate for the metric was $1.89 billion. Net revenues were $6.79 billion, up 2%, driven by higher asset management revenues and transactional revenues. We had projected revenues of $6.78 billion. Total client assets were $5.69 trillion as of Jun 30, 2024, up 16% year over year. We had projected the metric to be $5.41 trillion. Investment Management: Pre-tax income was $222 million, jumping 31% from the year-ago quarter. Our estimate for the same was $276. million. Net revenues were $1.39 billion, up 8%. The improvement was largely attributable to a rise in asset management and related fees. We had projected revenues the same as the reported number. As of Jun 30, 2024, total assets under management or supervision were $1.52 trillion, up 8% year over year. Our estimate for the metric was $1.5 trillion.

Capital Position Solid

As of Jun 30, 2024, the book value per share was $56.80, up from $55.24 in the corresponding period of 2023. The tangible book value per share was $42.30, up from $40.79 as of Jun 30, 2023. Morgan Stanley’s Tier 1 capital ratio (advanced approach) was 17.1% compared with 17.8% in the year-ago quarter. The common equity Tier 1 capital ratio was 15.3%, down from 15.8% a year ago.

Share Repurchase Update

In the reported quarter, Morgan Stanley repurchased 8 million shares for $750 million.

2024 Outlook

Management expects the IS segment NII to decline modestly in the third quarter on a sequential basis. Given the current macroeconomic headwinds, wealth management segment pre-tax margins are estimated to be in the mid-20% range.

Long-Term Objectives

The company expects an ROTCE of 20% or more. The efficiency ratio is expected to be less than 70%. For the WM segment, the pre-tax margin is projected at more than 30%. Across the WM and IM segments, total client assets are expected to be $10 trillion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

Currently, Morgan Stanley has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Morgan Stanley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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MSCI cuts China stocks, elevates India’s presence in a signal of shift in emerging markets

• MSCI removes 60 Chinese stocks, further reducing China's presence in emerging market indexes.
• Seven Indian stocks to be added to MSCI Global Standard Index in the next few weeks.
• Weight of HDFC Bank to be increased in two tranches.

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In a notable shift, MSCI (Morgan Stanley Capital International) is set to remove a significant number of Chinese stocks from its indexes, reflecting the increasingly challenging economic prospects for China. 

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Simultaneously, India is making strides in closing the gap with China on the MSCI Global Standard Index with the announcement of seven stocks to its India gauge, and an increase in the weight of HDFC Bank in what signals a shift in the economic landscape of emerging markets.

MSCI’s equity indexes are tracked by institutional investors worldwide for asset allocation and investment analysis.

China’s decline in MSCI indexes

MSCI Inc. has announced it will remove 60 stocks from the MSCI China Index this month. This follows the removal of 56 stocks in May and 66 in February, marking the highest tally of deletions in at least two years. 

As of the end of July, China represented 22.33% of the Emerging Markets gauge.

The changes, effective after the close on August 30, will also apply to the MSCI All Country World Index. Among the stocks slated for removal are Air China Ltd., Sany Heavy Equipment International Holding Co., and Shanghai Fosun Pharmaceutical Group. 

The deletions underscore the increasingly grim prospects for the world’s second-largest economy, as Chinese shares risk losing their outsized presence in emerging market portfolios to peers such as India and Taiwan.

In a Bloomberg report, Marvin Chen, a strategist with Bloomberg Intelligence in Hong Kong, stated,

These deletions will help even the playing field for EM investors. The large weighting and impact of China earlier may be more evenly distributed to other markets such as India, Korea, and Taiwan.

India’s ascendancy in the MSCI Global Standard Index

In contrast to the reduction of China stocks from its indexes, MSCI announced the addition of seven stocks to its India gauge, including Dixon Technologies India Ltd., a supplier to Samsung Electronics Co.

Meanwhile, Bandhan Bank Ltd. will be removed, and the weight of HDFC Bank Ltd. will be gradually increased.

Rail Vikas Nigam Limited (RVNL), Dixon Technologies, Vodafone Idea, Oil India, Zydus Lifesciences, Prestige Estate Project and Oracle Financial Services Software (OFSS) are the seven stocks that will be included in the MSCI Global Standard Index in the next few weeks, said a release from MSCI.

The move will increase the global visibility of the stocks and attract foreign investors to them.

The share price of Dixon and Oil India rose by 3% and 2.72% respectively. 

The MSCI announced that it will maintain HDFC Bank in its indices, and bump up the ‘Foreign Inclusion Factor’ for the stock from 0.37 to 0.56 which means 56% of its shares will be available for foreign investment in the index.

The weightage of the bank in the Global Standard Index will be raised in two tranches.

HDFC Bank stands to gain significantly, with the increased weight likely to attract $1.8 billion in inflows in the near term and another $1.8 billion by November, according to Abhilash Pagaria, head of alternative and quantitative analysis at Nuvama Wealth Management Ltd.

India’s increasing weight likely to bring inflows of up to $3 billion

India’s weight on the MSCI Global Standard Index, which tracks emerging market stocks, has risen to a record high.

The country’s weight is expected to rise from 19.2% to 19.8%, while China’s weight will fall from 24.8% to 24.2%. This shift is likely to attract inflows of about $3 billion into India’s equity markets, according to Nuvama.

The changes in the index weights will come into effect after markets close on August 30.

“Given the current pace and momentum in domestic equities, India could potentially cross 22% weightage by year-end,” said Pagaria.

Analysts and fund managers broadly agree that India’s increasing presence in the MSCI Emerging Markets (EM) Index enhances the gauge’s appeal to global investors who have been cautious due to China’s dominance.

This change is expected to make India a more favourable standalone investment destination, especially with the rising equity market, increased free float for companies, and new large listings narrowing the gap in weightings by year-end.

Global funds however are expected to remain cautious on the broader market and will most likely play selective stocks on Asia’s fifth largest market, given the high valuations the scrips trade on, market watchers said.

Other companies that will see an increase in their weightage on the index include Bharti Airtel, Coal India, and Mphasis. Meanwhile, Maruti Suzuki India, LTIMindtree, Ambuja Cements, Adani Enterprises, Yes Bank, and SRF will see a reduction.

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Goldman Sachs, Morgan Stanley took stakes in US spot bitcoin ETFs in Q2, filings show

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Reporting by Suzanne McGee; Editing by Ira Iosebashvili and Leslie Adler

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Lykos to lay off 100 employees after MDMA drug setback; founder to exit board

Lykos Therapeutics will lay off 75% of its workforce, or about 100 employees, and founder Rick Doblin will leave the board, the company said on Thursday, days after the U.S. FDA declined approval for its MDMA-based PTSD treatment.

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Why China’s and Russia’s Militaries Are Training Together

The two countries have held joint exercises near Alaska, Taiwan and Japan in defiance of the United States and its alliances.

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By David Pierson

Reporting from Hong Kong

China and Russia have pressed an informal political and economic alliance against the West. Now they are stepping up the cooperation between their militaries with increasingly provocative joint war games.

Chinese and Russian long-range bombers patrolled together near Alaska for the first time last month. Days earlier, the countries held live-fire naval drills in the hotly contested South China Sea for the first time in eight years. And they have more frequently buzzed the skies and sailed the waters together near Taiwan, Japan and South Korea, where America has strategic interests.

The military exercises are, in some ways, the most vivid expression of an alignment between China’s top leader, Xi Jinping, and President Vladimir V. Putin of Russia as they have sought to challenge their chief geopolitical rival, the United States.

China has been frustrated by American trade restrictions and Washington’s building of security alliances in Asia. It has pushed back by trying to court European countries with trade and building its influence among poorer countries with investments. But those efforts can go only so far in countering the dominance of the United States.

“Beijing increasingly feels that diplomatic and economic actions are not enough to get its points across to Washington, so it is relying more on its military as a tool for signaling. Partnering with Russia is a way to amplify Beijing’s messaging,” said Brian Hart, a fellow with the China Power Project at the Center for Strategic and International Studies.

To Washington, the exercises sow doubts about whether the United States could prevail in a war in Asia against the combined forces of China and Russia. While American war planners have long considered scenarios with China and Russia individually, they have paid less attention to the prospect of the two nuclear-armed states fighting together because it had long seemed so unlikely.

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