India's earnings growth would push the Sensex towards the 42,000 mark, according to Jonathan Garner, chief equity strategist for Asia and Emerging Markets at Morgan Stanley.
“We are bullish on Indian equities,” Garner told BloombergQuint, adding that Morgan Stanley is overweight on the country's performance.
We think earnings growth in India would accelerate from around 2 percent on a trailing basis, from year-on-year, to around 20 percent. That's a key driver of our Sensex target of 42,000 this year.Jonathan Garner, Chief Asia & EM Equity Strategist, Morgan Stanley
Garner said that he expects better earnings momentum story from India, and forecast the Indian rupee to strengthen to mid-60 mark.
India is not as sensitive to global factors like the ongoing trade tensions between China and the U.S. as other emerging markets are, he said, adding that the trade war between the two biggest economies could favor India in the long run.
Modi's Return
The election verdict projected by the early exit polls is different to what the consensus was expecting, Garner said. The prediction favouring Indian Prime Minister Narendra Modi's return to power adds as an “important piece of jigsaw puzzle in terms of government stability.”
Key Highlights:
- Positive on Japan due to attractive valuations
- Expects India to remain relatively subdued, impacting the bond yields
- Says monetary policy won't be a headwind
- Sees crude oil price to settle around mid to high $70
- Increase in investment and pick up in consumption are key drivers of India's growth
- Indian markets look relatively cheaper on the price-to-book basis
Watch the full conversation here:
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