Here’s why Morgan Stanley’s Jonathan Garner is bullish on India

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Published: June 6, 2018 3:50:37 PM

At a time, when rest of the emerging economies are on deceleration, earnings for India are expected to accelerate, a global ratings agency said.

indian economy, india growth momentum, indian economy news, retail inflation, steel demand, vehicle sales, economy of india, india gdp, global economy, global financial serviceWe have a target of 36000 for Sensex on our minds, Jonathan Garner, chief strategist for Asia and emerging markets, said. (Image: Reuters)

At a time, when rest of the emerging economies are on deceleration, earnings for India are expected to accelerate, a global ratings agency said. We are overweight on India, and also expect the investors to stop lowering their positioning in India, Jonathan Garner of Morgan Stanley told ET Now. Indian markets are 3 percent below our target but may see a mild rally, he added. We have a target of 36000 for Sensex on our minds, Jonathan Garner, chief strategist for Asia and emerging markets, said. The global ratings agency sees earnings growth of India to be around 20 percent for the next two years.

However, high crude oil prices may may pose a risk for the Indian markets going ahead, he cautioned. Considering that the crude oil prices may actually come back as a headwind in 2019, it would be would be very cautious about strategically re-engaging here, he also told BloombergQuint.

Talking to ET Now, Jonathan Garner said that  the broader Asia emerging market indices were trading above 14 times forward PE, when the market peaked at the end of January. Even though the PE multiples may have come down at present, it is still very much above the long-run average, he added.  India typically trades at a premium to other markets in Asia because it has high return on equity and premium is at a fairly normal level – at about 30 percent valuation premium to Asia overall.

Among the countries that Morgan Stanley looks at, India has the third highest import-to-GDP bill. The current account is in a reasonably good position, Jonathan Garner said. We have been assuming $75 average for Brent this year, but we recently increased our forecast, for the end of 2019, out into the 90s, he said.

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