Potential Volatility in Indian Equities Anticipated by Morgan Stanley in 2024

In a recent analysis, Morgan Stanley (NYSE:MS) highlighted the potential for heightened volatility in Indian equities in 2024, attributing it to the upcoming general elections and a mix of macroeconomic factors. Today’s released note from the financial institution underscores India’s attractiveness to investors, citing robust earnings growth, economic stability, and consistent domestic capital inflows.

The report emphasizes that Indian equities are exhibiting decreasing correlation with other emerging markets, primarily due to the country’s robust macroeconomic framework. Against this backdrop, Morgan Stanley predicts a substantial 20% annual growth in corporate earnings for India. This positive outlook is further reinforced by the anticipation of sustained availability of domestic risk capital.

The analysis points to a pivotal factor for the positive investment sentiment towards India – the global shift towards a multipolar world. This geopolitical realignment is expected to contribute to a surplus in India’s balance of payments and enhance domestic liquidity conditions.

Investors are urged to closely monitor these developments as they unfold, as they have the potential to shape market dynamics and investment opportunities in one of the world’s fastest-growing economies. With the Indian general elections on the horizon, market participants may need to prepare for periods of uncertainty, yet they can also anticipate potential benefits stemming from India’s robust economic fundamentals and favorable investment climate.