India stock market correction is a buying opportunity, Morgan Stanley says

Investing.com -- India’s stock market correction presents a buying opportunity despite lingering concerns over growth sustainability, retail investor behaviour, and high valuations, Morgan Stanley (NYSE:MS) said.

The brokerage noted growth slowdown has unsettled markets but expressed confidence in a recovery, citing government expenditure acceleration, RBI liquidity measures, and easing regulatory pressures as key factors.

Most reasons for the slow growth patch are getting behind with analyst at Morgan Stanley saying “we do not believe fundamentals warrant a major deterioration in stock market sentiment from here.”

Morgan Stanley’s proprietary sentiment indicator entered buy territory for the first time since mid-2022, signalling potential upside. However, risks remain, including policy missteps, a deeper U.S. market correction, and slower global growth.

Private financials were highlighted as offering the best risk-reward ratio in the current environment.

While retail investors have shown resilience, the price decline has been marked by falling trading volumes, which Morgan Stanley attributed to an absence of bids rather than aggressive selling.