'Don't worry, this may be time to engage in stocks': MD at Morgan Stanley India

CHENNAI: Ridham Desai, managing director and chief equity strategist at Morgan Stanley India, said increasing consumption and private borrowing along with macroeconomic stability puts India at an advantage and there is no need to worry about the recent stock market slump. Speaking at an event here on Sunday, he said, "Do not be too worried, this may just be a very opportune time for you to engage in stocks."

India is the only country in the G20 economy where the ratio of government debt to GDP is declining, with the possibility that by 2028, India will run a primary balance, he said. "When government steps away from the debt market, (it) crowds in private sector borrowing activity and (will) take growth higher," he said.

Desai said the rising number of middle class and rich families over the decade means more companies believe that India is going to drive between 10-50% of their revenue growth in the next five years. He anticipates a lending boom with the ratio of private debt increasing from 75% to 100% GDP in a decade, further boosting the growth.

"When you combine the declining primary deficit with rising private sector leverage, you get a very good stock market outcome," he said. "This is the fastest growing consumer market in the world and it is going to be a very significant market. So, India's future, in my view, remains very bright," he said.

He said declining volatility of inflation and interest rate meant that India's growth volatility also declined. "If you know that the growth volatility will be low, you will actually pay a premium valuation for such a business. That in large part explains the boom in the stock markets of the last few years," he said.