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Who will be the darling of EMs this year?

Cristian Baitg | E+ | Getty Images

The crash in oil prices, which has come as blessing to some and curse to others, presents a new twist to investing in emerging markets in 2015.

Complicating matters further, developing economies are also contending with slowing growth in China, a recession in Russia and the prospect of higher U.S. interest rates.

So, which markets are poised to deliver the best returns in the current environment?

India, Turkey and Taiwan are Goldman Sachs' top picks in the emerging market space this year.

"Coming into 2014, we argued that picking the right spots in EM would be more important than taking a view on the aggregate equity index," Caesar Maasry, head of emerging market equity strategy at Goldman Sachs wrote in a note published on Friday.

"Heading into 2015, we maintain a similar view – there are clear winners and losers from the recent decline in commodity prices, a strong U.S. economy and potential Fed hikes," he said.

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As oil-importers, Turkey and India stand to benefit from a continued improvement in their current account balances – a pivotal shift from their hefty deficits that made them vulnerable during the 'taper tantrum' of 2013.

The two markets could also get a boost from potential interest rate cuts during the first half of the year, Maasry said. Easing inflation is seen opening the door to monetary easing in both countries.

India and Turkey were among the world's best performing equity markets in 2014, rising 30 percent and 28 percent, respectively. By comparison, the broader MSCI Emerging Markets Index declined almost 5 percent last year.

Taiwan, meantime, one of the world's leading electronics exporters, stands to benefit from a pickup in U.S. demand, Maasry said.

In addition, Taiwan's domestic economy is strengthening thanks to a thriving tourism sector and rising private consumption.

The country's benchmark Taiex index rose 8 percent last year.

Shweta Singh, senior economist at Lombard Street Research says the task of differentiating among emerging markets has become more subtle since the taper tantrum – when investors indiscriminately punished countries with current account deficits.

"The need to draw economic distinctions will only increase in 2015 even as tighter liquidity conditions test investor patience," she said.

"Demographics, catch-up growth potential and competitiveness gains are key to outperformance.Those that are less exposed to China and commodities will fare better,"she added.

Singh believes India is the economy best place to outperform. She is also upbeat on the outlook for Mexico, the Philippines and Turkey.

On the other side of the spectrum, Russia, Brazil, South Africa, Chile and China may disappoint, she said.

"Painful, gradual adjustment will make China a laggard, driving down growth in metals exporters like Brazil, Chile, South Africa, and to a lesser extent, Indonesia. Oil dependent EMs including Malaysia will also come under significant pressure from lower crude prices," she said.

"At the extreme end of the spectrum is Russia, which faces a perfect storm from financial sanctions and crashing commodity prices."