Morgan Stanley-India Equity Strategy Playbook Can the Market Go into Bubbl...-106347492

MFebruary5,202410:00AMGMTFoundationIndiaEquityStrategyPlaybookAsiaPacificMorganStanleyIndiaCompanyPrivateLimited++91226118-2222+91226118-2224CantheMarketGointoBubbleRidhamDesai+91226118-1008Territory?EquityStrategistIndianequitiescontinuetopoweraheadsupportedbyastrongRidham.Desai@morganstanley.commacro,corporatefundamentalsandadomesticbid.Weevaluatefactorsthatcouldpushthemarketintobubbleterritory.SheelaRathi•Thebudgetaddsreasonforthebullmarkettocontinue:ThebudgetEquityAnalystchoosesmacrostability(arecurringthemeforthepastdecade)bySheela.Rathi@morganstanley.comcontractingthedeficitastheeconomywilllikelytransitiontoprivatespendingasakeydriverofgrowth.ThisislikelytofurtherreduceIndia’sNayantParekhbetatotheworld(akacostofequity,betaisnow~0.3).ItallowsforthegapbetweenrealGDPgrowthandrealinterestratestoriseandprovidesupportEquityStrategisttoshareprices.Ofcourse,thisdependsonstrongerprivatedemand,whichNayant.Parekh@morganstanley.comwethinktheeconomyislikelytoexperience.Relatedresearch•Factorsthatcreateabubble:a)Strongpolicyenvironment–continuityinF2025InterimBudget:PositiveFiscalSurprisethegovernmentwithamajoritywillensurethesame;b)fallingprimaryQEDec-23EarningsThusFardeficit–thestageissetforthedeficittogotozerointhecomingthreeAssetReturns:Equitiesbackatthetopyears;c)risingprivatedebttoGDP–quitepossiblesinceth...