​​​
  1. Why Morgan Stanley is bullish on India despite GDP disruption

Why Morgan Stanley is bullish on India despite GDP disruption

Morgan Stanley says India is expected to become USD 6 trillion economy -- third largest in the world -- in the next 10 years.

By: | Updated: September 28, 2017 10:58 AM
Emerging markets, China, India, climate change, Green Investors, Morgan Stanley Morgan Stanley says India is expected to become USD 6 trillion economy — third largest in the world — in the next 10 years. (Image: Reuters)

India is reeling under intense pressure to revive its economic growth which had hit a three-year low in the first quarter of FY18. At a time when the country is making a switch to the GST regime, undergoing massive banking crisis and struggling to create jobs, Morgan Stanley is bullish on India and has said the country is expected to become USD 6 trillion economy — third largest in the world — in the next 10 years.

The global brokerage firm has identified the GST implementation as a disruption to smaller businesses leading to job losses, but said subsequently it is going help lower the public debt. Morgan Stanley has said India’s political stability, privacy debate over Aadhaar and other judicial decisions will remain crucial to India’s growth, however, country’s digitisation drive would give the economy a great push.

“We estimate that digitisation will provide a boost of 50-75 basis points to GDP growth and forecast that India will grow to USD 6 trillion economies and achieve upper-middle income status by 2026-27,” Morgan Stanley head India research and India equity strategist Ridham Desai.

The same projection was made by India’s richest businessman Mukesh Ambani at an industry event on Wednesday. He said for India data is the new oil and the digitisation drive would make the Indian economy grow nearly three-fold to USD 7 trillion in the next ten years to become one of the world’s top three economies.

The global brokerage firm released a report titled ‘India’s digital leap – The multi-trillion dollar opportunity’ on Wednesday highlighting India’s digital revolution as an opportunity to grow by trillions. It estimated that India’s real and nominal GDP growth will grow annually by 7.1% and 11.2% over the coming decade.

Not just the GDP, Morgan Stanley also estimates benchmark Sensex to cross the 1 lakh-mark by 2028. According to Desai, Indian stock markets are likely to remain robust as a stronger economic growth should drive stronger corporate earnings growth. The global brokerage firm noted that there is scope for visible shifts in economic activity starting in 2018 which would eventually lead India to be the top five equity markets in the world with a market capitalisation of $6.1 trillion, and the third-largest listed financial services sector around the globe with a market cap of $1.8 trillion by 2027. The global brokerage firm estimated that India’s real and nominal GDP growth will grow annually by 7.1% and 11.2% over the coming decade.

India’s consumer sectors are also likely to add about $1.5 trillion over the next ten years. “We project gross FDI inflows amounting to $120 billion by FY’27, almost double the current 12-month trailing run rate of $64 billion,” Desai said. “We project equity saving of USD 420 billion–USD 525 billion over the next ten years, versus the respective USD 60 billion and USD 120 billion that households and foreign portfolios invested over the previous ten years,” he said.

What Morgan Stanley is cynical about is court rulings India. “Any adverse judgement in the courts could derail one of the main anchors of our framework,” the brokerage firm said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top