Morgan Stanley sees GDP growth at 6%; expects Sensex to touch 23,000 by Dec

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Morgan Stanley has said that India's economy will grow at 6 per cent in the current fiscal as it has managed to come out of a trough.

The global brokerage firm also sounded bullish on the stock markets and pegged the Sensex target at 23,000 by December.

Morgan Stanley said, "We are confident that the economy has come out of the furrow, though the recovery will be gradual beginning the second half, and will close the fiscal at 6 per cent."

The optimism regarding the economy, according to the reports, is based on the recovery in exports which have been rising since January, apart from the election-related spends that will help drive consumption. Also the positive vibes since September last year are also expected to revive investments.

Morgan Stanley said, while exports constitute 20 per cent of the GDP, consumption chips in with a high 55 per cent, hence the optimism of a gradual recovery.

On the market, it said, "We see the Sensex sniffing at 23,000 by December and we are bullish on cyclicals and a bit averse to defensives like consumer staples. We are also overweight on financial sector scrips such as private banks and the entire energy sector as the government has let the market realize the prices of petrol and diesel."

However, the Bank warned that one of the biggest worries for the market is the rising share of the FII holdings in frontline stocks in particular and the market in general. The problem will come if the foreign liquidity starts tapering off, which is sure to happen if the US withdraws the stimulus.

Read more about: morgan stanley
Story first published: Wednesday, June 5, 2013, 9:30 [IST]
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