Market now a macro trade; buy cyclicals, shun beta: Morgan

Moneycontrol Bureau

The signs of policy acceleration and growth is causing investors to reconsider its bias for quality stocks, feels brokerage house Morgan Stanley.

High beta stocks did well in December, indicating that the market may be slowing getting convinced about a turnaround in the economy, Morgan Stanley said in a note to clients.

“Quality lost ground in December but remained a strong performer implying that the market is still indecisive about its move towards growth styles. January should be watched for further evidence of whether the market is changing behavior,” the note said.

“In our view, the market remains in the midst of a big macro trade, which means sector positions should be wider. Our stock-picking approach continues to be to buy cyclicals and stocks with GARP (growth at reasonable price) orientation, although, as usual, we avoid beta,” the note said.