India's Per Capita Income Will More Than Double In Next 10 Years: Morgan Stanley
Key near-term catalysts include the monsoon rainfall trends and the budget for fiscal 2025
The seat losses faced by the Bharatiya Janata Party were due to "non-economic issues" as per a note by Morgan Stanley. The brokerage remains bullish on Indian equities due to strong earnings growth, driven by structural reforms. Moreover, it expects India's per-capita income could more than double by fiscal 2034, potentially unlocking further domestic consumption.
India's per capita income, during 2023-24 is estimated to be Rs 183,236 compared to Rs 169,496 for the year 2022-23. As per the report, it can shoot up to $5,800, which translated at today's exchange value is just a tad below Rs 5 lakh per annum.
Macros In Place
India's macroeconomic indicators are quite satisfactory, with the March-quarter growth in the gross domestic product surpassing expectations, credit growth at 15.8% and the purchasing managers' index in expansion. The country's manufacturing boom, energy transition and digital-infrastructure improvements continue to support economic expansion, according to a note.
Key near-term catalysts include the monsoon rainfall trends and the budget for fiscal 2025, it said. "Our India strategy team attributes the seat losses to non-economic issues and expects the government to still emphasise macro stability as its anchor to economic policy."
Despite a slightly elevated MSCI India 12-month forward price-to-earnings ratio, strong fundamentals support the market's valuation. India remains the top-ranked market in the Asia-Pacific Region, excluding Japan, and the emerging markets, according to Morgan Stanley.
Analysts are overweight on ICICI Bank Ltd., Maruti Suzuki India Ltd., GAIL (India) Ltd. and Godrej Properties Ltd.
Other Emerging Markets At A Glance
South Africa: Upgraded due to potential pro-reform outcomes following elections. However, uncertainty still remains.
Mexico: Downgraded to equal weight amid policy uncertainty following a stronger-than-expected election result for Claudia Sheinbaum and the Morena coalition.
Singapore, Poland, Greece: Maintains overweight rating due to strong fundamentals, attractive valuations, and supportive economic environments.
Indonesia: Downgraded to underweight due to uncertainty over the direction of future fiscal policy stance amid still high US rates.
Egypt: Upgraded to equal weight owing to improved funding conditions and commitment to structural reforms.
