Buy cyclicals, avoid beta; Morgan Stanley

Ridham Desai, Morgan Stanley says the market has steadfastly rewarded quality since elections, something to which it was endeared in the post-crisis bear market.

“In our view, the market remains in the midst of a big macro trade, which means sector positions should be wider. We think the market will slowly move away from quality in favor of growth, operating leverage and, eventually, financial leverage,” he adds.

Desai says, “Stock-picking approach remains to buy cyclicals and stocks with GARP orientation, although, as usual, we avoid beta.”

Meanwhile, Sajjid Chinoy, JP Morgan expects the RBI to stay on hold in today’s policy review as CPI inflation rises and core inflation momentum accelerates.

“The Cash Reserve Ratio is unlikely to be cut but rationalisation of the Statutory Liquidity Ratio is expected to continue. We expect more easing later in the year, anticipating inflation will remain benign. The collapse of the current account deficit and strong capital inflows allow RBI to focus on domestic dynamics,” he adds.