Morgan Stanley raises exposure to financials as slew of tailwinds surface

Financials are now the biggest overweight for Morgan Stanley followed by consumer discretionary and industrials

Morgan Stanley has increased its overweight stance on the financial sector amid the emergence of multiple tailwinds. “Rising short rates, higher credit growth, and peaking credit costs imply outperformance for Financials – we double our overweight (OW) position to 600 basis points (bps),” equity strategist led by Ridham Desai and Sheela Rathi say in a note titled ‘Back Up the Truck and Load Financials.’

“We are in the midst of a big bull market, and financials have not done well. The reason is that the RBI has stayed dovish longer than the market expected. The RBI has held on to