New Delhi, Aug. 4 -- Sticky inflation and resilient growth would likely favour equities; meanwhile, fixed income may require a more selective and diversified approach, according to a report by Morgan Stanley.

The report noted that equities could benefit from stronger nominal growth, with fiscal policy, tax incentives and deregulation providing additional support.

Morgan Stanley expects inflation to remain above target as resilient labour markets, productivity gains and capital investment will likely support real growth. "In this backdrop, equities are likely to benefit from stronger nominal activity, while fixed income may require a more selective and diversified approach to deliver attractive returns," it noted.

Corporate earnings exp...