New Delhi, Aug. 15 -- India's internet economy has significant headroom for long-term growth, with rising digital adoption expected to drive expansion across online food delivery, e-commerce and logistics, while improving scale could support profitability, according to a research report by Morgan Stanley.

The global brokerage firm noted that India's internet stocks have already staged a strong recovery, with the India Internet market-cap index gaining about 20 per cent from its early-June low, compared with a 6 per cent rise in the Nifty 50. Over the last four months, the index has outperformed the Nifty 50 by around 18 per cent.

Morgan Stanley said India's internet sectors remain positioned for structural growth, supported by increasin...