Morgan Stanley, Citi, and Nomura: Key Insights on US Elections, India Strategy, and Power Transmission Growth

Morgan Stanley on US Elections and Asia’s Outlook

Tariffs are expected to be a key issue for Asia. If implemented, they could create downside risks for China’s economy and the broader Asian market.

Watching corporate confidence and financial conditions will be important indicators.

Tariffs could come as early as the first half of 2025.

There are still questions on the potential impact: Will tariffs be limited to 50-60% on China alone, expanded to other economies, or a universal 10% tariff on all imports?

Beyond China, economies like Korea, Taiwan, Malaysia, and Thailand may be more vulnerable due to their high trade exposure.

India, Japan, and the Philippines are the least exposed in this scenario.

Morgan Stanley India Strategy Update

Excluding Oil PSUs, revenue, EBITDA, and net profit have grown by 8%, 7%, and 7% year-over-year, exceeding analysts’ forecasts.

The EBITDA margin is 26%, slightly higher than anticipated.

Thirty-two Nifty-listed companies have shown revenue growth of 4% and net profit growth of 2%, surpassing analysts’ predictions.

The earnings beat ratio has improved, although relative stock performance is down quarter-over-quarter, a trend consistent with previous quarters.

Across a broader set of 1,215 companies, revenue and net profit are up 7% and 1% year-over-year, but there has been an 83-basis-point contraction in margins.

Citi India Strategy Outlook

A Trump win is expected to strengthen the US dollar, raise US interest rates, and increase trade policy uncertainty.

While a stronger dollar is generally negative for India, within the emerging markets context, it may prompt a rotation of investment toward China.

India’s economy is less affected by trade policy uncertainty due to its primarily domestic focus and limited exposure to goods trade with the US.

Over the medium term, domestic consumption and investment growth will likely drive Indian earnings.

Valuations have decreased from recent highs but remain above historical averages. Citi suggests buying on dips, with a September 2025 Nifty target indicating about a 4% upside.

Nomura on India’s Power Transmission and Distribution (T&D) Sector

Nomura has initiated coverage on CG Power (target price of Rs 970), GE T&D (target price of Rs 2,500), and Apar Industries (target price of Rs 11,700), highlighting their long-term growth potential.

India’s power transmission sector is set for extensive growth due to rising electricity demand and ambitious renewable energy goals.

The Central Electricity Authority (CEA) projects $110 billion in investments in India’s grid over FY22-FY32.

Globally, investments in transmission infrastructure are also rising in regions like Europe, North America, and MENA.

Europe focuses on integrating renewable energy, North America on grid modernization, and MENA on meeting increased demand and sustainability goals.

Companies with strong tech capabilities and a solid domestic manufacturing base are well-positioned to benefit from these opportunities.

Additionally, Donald Trump has warned of imposing additional tariffs exceeding 60% on Chinese goods sold to the U.S. during his campaign.

These tariffs could significantly impact China at a crucial time, as the country increasingly depends on exports for economic growth while facing a real estate downturn and sluggish consumer spending.

According to Zhu Baoliang, the former chief economist of China’s economic planning agency, this move could reduce China’s exports by $200 billion, potentially lowering its GDP by 1 percentage point.