'India To Outperform China For A Fourth Straight Year; It's Unprecedented...': Morgan Stanley Strategist

Morgan Stanley's Chief Asia & Emerging Market Strategist, Jonathan Garner, lauds India's robust performance, positioning it as the standout market for 2024.

Garner emphasised that India's weight in the EM index is on the rise, making it a moving target for investors who are recognising its potential.

Garner also asserted that India's GDP growth and earnings per share growth are superior, driven by the sustained earnings growth of Indian companies, making it a top pick in their investment strategy.

The strategist pointed out that India's ability to weather the Fed rate cycles and maintain a stable exchange rate, coupled with unprecedented FDI and private equity commitments, sets it apart from other emerging markets.

Garner further revealed that global investors are starting to shift toward the Indian market, following increased foreign direct investment (FDI) and portfolio equity flows. This development signifies a new era in Asian investing, with India leading the growth narrative.

In contrast, Garner expressed caution about China, citing expectations of less than half the nominal GDP growth of India, limited earnings per share growth, and declining return on equity.

He firmly recommended staying overweight on India and expects it to outperform China for the fourth consecutive year in 2024, an unprecedented trend.

As the US 10-year yields are perceived to have peaked, Garner anticipates a disinflationary global process, with India well-positioned due to its improved current account and fiscal position.

While not commenting on elections, Garner maintains a bullish outlook on India, projecting the Sensex to reach 74,000.

He underscored the importance of domestic growth and recommended prioritising GDP growth and earnings for understanding a country's future return.

Garner concluded that the stars are aligned for India in 2024, foreseeing a breakout year, and reaffirms the preference for financials and domestic-focused sectors over global-denominated sectors in the Indian market.