Good news for India! Big predictions on country by one of biggest financial services firm, says India set to become world’s most…

It also noted that current price action hides how much stocks have de-rated relative to long bonds and gold, while India continues to gain share in global GDP.

Updated: August 13, 2025 4:59 PM IST

Morgan Stanley projects that India is on track to become the world’s most sought-after market, undergo a significant energy transition, record a rise in its credit-to-GDP ratio, and see manufacturing take up a larger share of GDP.

The report highlights that India’s GDP is becoming less dependent on oil, while exports particularly services are accounting for a growing share. Coupled with fiscal consolidation and the prospect of a primary budget surplus within the next three years, this shift is expected to reduce the country’s savings imbalance. As a result, the economy could sustain structurally lower real interest rates over the long term.It stated “India will become the world’s most sought-after consumer market”.

What Morgan Stanley Says On India’s Stock Market?

At the same time, the report pointed out that lower inflation volatility, resulting from both supply-side and policy changes like flexible inflation targeting, means that volatility in interest rates and growth rates is likely to decline in the coming years.

It also said that high growth combined with low volatility, falling interest rates, and low beta could lead to higher price-to-earnings (P/E) ratios. This scenario, according to the report, will support a shift in household balance sheets towards equities, which is already visible in the equity market in the form of a sustained bid on stocks.

The low beta itself, it said, stems from improved macroeconomic stability and structural shifts in household balance sheets towards equities.

The report further said that the soft earnings growth patch, which began in the second quarter of FY2025, now appears to be ending, although the market may not yet be fully convinced.

It added that a dovish central bank is supporting a turnaround in growth, but confidence in this may require better clarity on the external growth environment and rationalization of GST rates.

Looking ahead, the report also highlighted that a final trade deal with the US, more capital expenditure announcements, acceleration in loans, already visible in the corporate bond market, uniform improvement in high-frequency economic data, and improving trade with China could serve as catalysts for further growth. 

(With Inputs From ANI)