Indian equities poised for strong growth ahead

Morgan Stanley

Indian equities are poised for a strong growth phase over the coming years despite recent underperformance against emerging markets, according to a report by Morgan Stanley. The brokerage said improving earnings growth, rising investments and supportive macroeconomic conditions continue to strengthen the long-term outlook for the domestic stock market.

In a strategy note, Morgan Stanley analysts Ridham Desai and Nayant Parekh said Indian equities have delivered their weakest trailing 12-month relative performance against emerging market peers on record. 

However, the brokerage believes the market's underlying fundamentals remain robust and could support strong compounding returns through the remainder of the decade.

The report said the absence of a direct artificial intelligence-linked market theme has remained one of the biggest challenges for Indian equities at a time when global capital flows are increasingly favouring AI infrastructure, semiconductor and technology-heavy markets. 

"The lack of a direct AI play seems to be the most persistent challenge to the equity market," the analysts wrote. 

Despite the weak relative performance of Indian equities, Morgan Stanley highlighted several positive indicators that are beginning to emerge.                             -IANS