• Notification Date: 13-12-2024
• Notification No: N/A

India's Longest Bull Market Still Has Room to Grow, Says Morgan Stanley

The stock market of India has entered its longest bull run, thereby surpassing the 2003-08 rally in time span, but it has only delivered a third of its potential returns so far, according to analysts at Morgan Stanley. The continuing rally, which began in March 2020 amid the early uncertainty of the pandemic, is still showing strong signs of growth.

Morgan Stanley believes the market has more room to enlarge, driven by a number of positive factors. These include a decrease in the primary deficit of India, a growing participation of women in the workforce, and a reverberation in the sectors of energy. Additionally, there has been a rise in the democratization of investing and credit, which is somewhere helping towards fueling economic activity.

The firm also sees the economy of India performing well in the coming years, with nominal GDP expected to grow at 10-11% annually over the next five years. Corporate earnings are predicted to compound at an 18-20% rate, thanks to factors like developing corporate balance sheets and increasing private investments.

Morgan Stanley is hopeful about sectors such as financials, consumer discretionary, industrials, and technology. On the other hand, it expects Consumer Staples, Utilities, and Healthcare to underperform. The focus is now shifting from broad macroeconomic growth to more specific stock-picking opportunities, with small and mid-cap stocks expected to regain momentum.

Themes like private capital expenditure in areas such as energy mobility, defense, and semiconductors are significantly appearing as new areas of growth, alongside traditional sectors like cement and real estate. With the improving macroeconomic solidity of India and ongoing structural improvements, the equity market of the country still holds notable potential for further growth.

Morgan Stanley highlights the necessity of focusing on the right sectors and themes in order to navigate the next phase of this bull market.