Samvat 2082: Ridham Desai Tells Investors To 'Sit Tight, Avoid Random Moves' Amid Uncertainty

Investors should "sit tight and avoid random moves" in a stock market that is reeling through global economic and geopolitical uncertainty, according to Ridham Desai, managing director and chief equity strategist at Morgan Stanley India.

"The stock market will always remain uncertain by nature. Sitting tight and doing nothing is the best way to accumulate wealth," Desaid told NDTV Profit in a televised interview.

Following a consolidation over the last 12 months in domestic equities, he said India is now the most attractive emerging market relative to China in 25 years.

Stocks will face tailwinds when India's nominal GDP growth rate of 11-12% translates into earnings growth of 15%.

The Reserve Bank of India and the central government carefully managed inflation during and after the Covid-19 pandemic. The policy moves resulted in high real interest rates and a benign fiscal deficit by 2024.

Now, Desai said, the central bank is injecting liquidity into the system and the government is giving a consumption push via tax cuts. This will lead to 'reflation' in the economy.

Desai pointed out how the lack of foreign participation in Indian equities boils down to three key factors — valuation, artificial intelligence and competition.

“One is that they still have problems with India’s absolute valuations, even though relative valuations have improved significantly," he said. “One year ago, China was at nine times earnings, India was at 20 times. China is now at 15 times, and India is still at 20 times.”

"Markets with a large proportion of AI trade, excluding Europe trade, defence and AI have been driving a lot of markets up 20-40%. That’s why markets are up last 12 months, and that’s why it feels India has been in a bear market," he added.