India set to become World's most sought-after consumer market: Morgan Stanley

Morgan Stanley's latest report highlights India's emergence as a leading consumer market amid a significant energy transition, rising credit-to-GDP ratio, and expanding manufacturing sector. The report attributes India's increasing share in global output to strong foundational factors, including robust population growth, macroeconomic stability, improved infrastructure, an expanding entrepreneurial class, and better social outcomes. It forecasts GDP growth at 6.3% in FY25 and 6.5% in FY26, supported by fiscal and monetary measures alongside a recovery in service exports. While macroeconomic stability is expected to remain within a comfortable range, external risks such as global trade policies, interest rate movements in the U.S., and geopolitical tensions pose potential challenges.   

India’s stock market outlook remains favourable, with equity markets currently undervalued despite strong fundamentals. Sectors such as financials, consumer discretionary, industrials, and technology will likely outperform as earnings growth accelerates. The Reserve Bank of India (RBI) has adopted an accommodative monetary stance by cutting rates and increasing liquidity, with another rate cut expected in April. On the fiscal front, the government has prioritised consumption growth through income tax cuts and increased capital expenditure while maintaining fiscal discipline. Inflation is projected to moderate, with Consumer Price Index (CPI) inflation expected to decline to 4.3% in FY27 from 4.9% in FY25. The current account deficit will likely remain below 1% of GDP, reinforcing India's external resilience. India is expected to regain momentum among emerging markets in 2025. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.