Global brokerage Morgan Stanley has picked its winners for the next leg of India's growth story, naming a 10-stock focus list that leans hard into Financials, Consumer Discretionary and Industrials, the sectors it is betting on as India's capital expenditure (capex) cycle turns. Every single name on the list carries an "overweight" rating.
The list, put out by strategists Ridham Desai and Nayant Parekh in a report titled "A Long Way Up" dated September 4, 2026, includes Maruti Suzuki India, Trent, Lenskart Solutions and Varun Beverages from the consumption space; Bajaj Finance and ICICI Bank from financials; Larsen & Toubro (L&T) from industrials; UltraTech Cement from materials; Prestige Estates from real estate; and Adani Power from utilities.
Widest Gap Between Winners And Laggards
Adani Power is the standout on the list, up 71% over the past 12 months, a 79-percentage-point outperformance against the MSCI India index. Bajaj Finance and Larsen & Toubro also outperformed comfortably, up 19% and 11% respectively over the same period.
At the other end, Trent is the biggest laggard, down 47% over 12 months, a 45-percentage-point underperformance against the index. Maruti Suzuki India and UltraTech Cement also declined, down 13% and 11% respectively, even though both remain overweight-rated picks. Lenskart Solutions, a more recent listing, does not yet have a full 12-month performance track record in the report.
Stock picks by Morgan Stanley Research in September 2026
Photo Credit: NDTV Profit
Why These Sectors
Morgan Stanley's overweight call on Financials rests on the view that net interest margins (NIMs) for banks are troughing, with strong credit growth and benign credit costs expected to support a strong earnings cycle. ICICI Bank and Bajaj Finance are the brokerage's picks in the space.
On Industrials, the brokerage pointed to a pickup in private capital expenditure across energy, mining, defence, fertilisers, semiconductors and data centres as the key driver, with Larsen & Toubro its preferred name.
On Consumer Discretionary, Morgan Stanley expects strong consumption growth helped by lower interest rates, tax cuts and rising incomes, a thesis reflected in its overweight calls on Maruti Suzuki India, Trent and Lenskart Solutions, even though two of those three names have underperformed the index over the past year.
The brokerage remains cautious on Materials overall (underweight, -300 basis points) but continues to prefer UltraTech Cement among domestic materials names over globally exposed ones. It is underweight Utilities (-100 basis points) given rich valuations, even as it stays overweight on Adani Power specifically.
The Bigger Picture
The focus list sits within Morgan Stanley's broader argument that India is in a multi-quarter growth upcycle, with a base-case Sensex target of 89,000 by June 2027, implying 16% upside from current levels. The brokerage has said it sees India's recent valuation de-rating as cyclical rather than structural, driven by a growth gap with the rest of the world that is now narrowing.
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