Why Morgan Stanley Recommends Buying On Dips

Morgan Stanley is “inclined to buy” into this market, especially if there is a dip, as it expects index returns to moderate over time.

Morgan Stanley has outlined six key themes in its portfolio where investors may find buying opportunities. In all of these themes, the brokerage has shown a preference for growth stocks and sector-wide positions.

Resons to Sell

• Fiscal slippages at the state level could hurt the market.
• The sell side estimates are too high as evidenced by weak earnings revisions breadth, suggesting that earnings are not strong enough.
• Mid-cap valuations look stretched; stocks of some high-quality companies also appear expensive.
• Market dynamics are challenging as there is pent-up equity supply given the rise in prices and valuations.

Also Read: Morgan Stanley Picks 14 Indian Mega-Cap Stocks As Likely Winners

What Will Drive The Index Higher?

In Morgan Stanley’s base case, the Sensex target for June 2018 is at 34,000 – the bear case pegs the index at 25,000 and the bull case at 39,000.