Morgan Stanley Sees Sensex at 36,939 by December 2015

Global brokerage firm Morgan Stanley remains bullish on India, expecting Sensex to touch levels of 36,939 by December 2015 under a bull case scenario.

Indian equities are benefiting from the start of a new growth cycle, says Morgan Stanley. Benign global environment is resulting in a positive shift in terms of trade and reforms can lift India's potential growth rate, the brokerage added.

Global commodity prices continued to slide, with crude oil prices falling to near five-year lows on Monday. This would not only help the government's efforts to curb inflation but also ease pressure on India's current account deficit.

India's gross domestic product expanded 5.3 per cent in the July-September quarter from a year earlier. Growth in the previous quarter was at a 2-1/2 year high of 5.7 per cent. But economists see India's growth recovering to above 6 per cent in 2015-16.

From a portfolio perspective, Morgan Stanley is overweight on energy, consumer discretionary, financials and technology stocks. It suggests avoiding high beta stocks.

Another global brokerage firm Citigroup has also raised its target on Sensex to 33,000 from 31,000 by December 2015.

From a portfolio perspective, Citi is overweight on banks, energy, cement and pharma stock. Citi expects interest rates to fall 75 basis points in 2015.