You are here: Home » Markets » News
Business Standard

Indian shares likely to fall led by banks: Morgan Stanley

RBI's tightening moves have made Indian markets more vulnerable to global cues

Press Trust of India  |  New Delhi 

The Reserve Bank of India's tightening moves have made Indian more vulnerable to global cues with share prices likely to fall, led by banking stocks, a Morgan Stanley report says.

According to the global brokerage firm, RBI's dovish commentary last Monday amidst possibly the severest liquidity tightening that the central bank has initiated since 1998 has made the asset even more vulnerable to global cues especially on possible tapering of quantitative measures in the US.

"As RBI's moves echo into the economy, we believe that share prices in India are likely to fall led by banks," Morgan Stanley said.

The global brokerage firm had earlier projected that the Nifty would trade in the 5,600-6,300 range, but "last week's policy guidance and dovish signals may take toll on the market led by financials", it said.

"We now think the Nifty is likely to be in a lower trading range of 5,200-6,000. We cut our bear case target from 17,912 to 16,200," Morgan Stanley said.

Morgan Stanley has revised the bear case on the Sensex down by another 10% from 17,912 to 16,200 and has lifted the probability of that happening from 20% to 35%.

Meanwhile, its bull case probability of 23,000 has fallen to 5% from 20% earlier.

The research further said "our probability-weighted index target for end-2013 is cut to 19,720," and added that "the fall could be more severe but the index has heavyweights, which are insensitive to rates and beneficiaries of a rising dollar."

The 30-share barometer, Sensex, which had lost over 517 points in the previous two sessions is trading almost flat with gains of just 49 points at 18,732.16 in morning trade today.

India ranks poorly on valuation, earnings revision breadth, political risk and corporate governance score, Morgan Stanley said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, August 08 2013. 12:22 IST
RECOMMENDED FOR YOU
.