INDIA is poised to become the world’s most sought-after consumer market while undergoing a significant energy transition, rising credit-to-GDP ratio, and expanding manufacturing sector, according to Morgan Stanley’s latest report.
The report highlights that India is gaining a greater share in global output due to strong foundational factors such as robust population growth, a functioning democracy, macroeconomic stability, better infrastructure, a growing entrepreneurial class, and improved social outcomes.
The financial services giant expects India’s economic growth to recover following a slowdown in the second half of 2024. It forecasts GDP growth at 6.3 per cent in FY2025 and 6.5 per cent in FY2026, driven by fiscal and monetary policy support, as well as a recovery in service exports.
The report emphasizes that macroeconomic stability should remain within a comfortable range, providing
policymakers with flexibility. However, it also notes that risks stem primarily from external factors such as global trade policies, interest rate movements in the US, and geopolitical tensions.
Morgan Stanley believes India’s stock market outlook remains promising.
The report indicates that equity markets are currently undervalued despite strong fundamentals and macroeconomic improvements. Earnings growth is expected to accelerate, with financials, consumer discretionary, industrials, and technology sectors likely to outperform.
The firm suggests that India’s strong economic fundamentals and stable macroeconomic environment make it an attractive market, especially in an uncertain global economic landscape.
On the monetary policy front, the Reserve Bank of India (RBI) has adopted an accommodative stance by cutting rates and increasing liquidity in the system. Morgan Stanley anticipates another rate cut in April, further supporting economic growth.
— ANI
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