New Delhi, May 18 -- Morgan Stanley believes the Indian economy may be on the cusp of a fresh growth cycle, driven by policy support, strong domestic demand and a revival in corporate earnings, even as geopolitical risks and global uncertainties remain key challenges.

In its latest India Equity Strategy Playbook report, Morgan Stanley said, "With growth acceleration likely in the pipeline and valuations and sentiment at near extremes, Indian equities are poised for a strong year ahead."

The brokerage noted that earnings growth is turning after "a six-quarter mid-cycle slowdown" and is expected to accelerate further on the back of "reflationary policies of the RBI and the government via rate cuts, bank deregulation and liquidity infusion...