New Delhi, Feb 6 || India’s growth cycle is set to accelerate backed by reflation effort of the RBI and the government via rate cuts, bank deregulation and liquidity infusion, continuing capex, tax cuts and relatively stimulating budget, a Morgan Stanley report said on Friday.
Thus, India’s hawkish macro set up post-Covid is now unwinding. The trade deals and thawing of relations with China add to the mix, the report mentioned.
“Indian stocks enjoy a rare combination of inexpensive relative valuations, poor trailing performance, strong policy stimulus and a consequent growth upcycle, an undervalued currency, weak foreign positioning and potentially a new buyback cycle,” it mentioned.
The global brokerage expects more buybacks as a result of improved taxation regime and modest net flows into stocks (issuances minus buybacks).
The falling intensity of oil in GDP and rising share of exports in GDP, especially services, and fiscal consolidation imply a lower saving imbalance.