A report titled ‘Why This Is India’s Decade’ looked at the trends and policies shaping the future of India’s economy. Market experts at India Today Conclave Mumbai dissected the factors that are in India’s favour when the whole world is reeling under economic uncertainty.
Ridham Desai, managing director, of Morgan Stanley India, said, “There are four big trends in the world right now: Demographic problem (aging population), de-globalization, disruption due to digitalization, and decarbonization because the world is obsessed with climate change. India is probably the only country in the world benefitting from these four trends.”
“The fact is that in the last five years, we have done a lot of heavy lifting on policies. India is set to become a factory to the world, an office to the world. We are going to get liberated from erstwhile energy price volatility and we have this amazing digital infrastructure called India Stack (a collection of disparate technology products and frameworks) that is going to give us a digital solution the world doesn’t have,” he said, adding that these trends are leading to optimism that India’s GDP will likely double in the next 10 years.
INDIA’S CONSUMPTION STORY
Speaking on the growth boom and its effects on consumption, Balasubramanian, managing director, and chief executive officer of Aditya Birla Sun Life AMC Limited, pointed out that every policy decision at the Centre and state government level supports future growth of the country.
“UPI has brought about a revolution in the banking system of the country. Every citizen is able to use a UPI platform for payments and the country is getting connected seamlessly, which naturally should lead to consumption,” he said, adding that not every policy is adopted with a short-term approach.
Balasubramanian also mentioned that the startup culture in India has pushed citizens of the country to become entrepreneurs and that, in turn, will increase consumption.
Balasubramanian further noted that the current problem in the world market is because it was not prepared for an energy crisis.
INDIA: LEADER OF NEXT BULL MARKET?
Agreeing that the bull run in Indian markets will be driven by India’s ‘domestic story’, Atul Suri, CEO of Marathon Trends PMS, said the benchmark index Nifty stands at 18,100 which is three percent less than the lifetime high of 18,600.
“If we look at China, the Hong Kong market is 40 percent from lifetime highs. Nasdaq, in the last one year, is 30 percent from lifetime highs, S&P 500, top 500 US corporates, 20 percent from lifetime highs. If we look at the top 20-25 global markets, the market nearest to lifetime highs in India,” Suri said, adding that stocks that fall less in falling markets are leaders of the next bull market.
He continued: “The real test of stocks, companies, and markets are in difficult times. And those stocks that fall less in bear markets, actually when markets turn around, are leaders. And that is the characteristic that India is showing. The last one year has been a global bear market, but India is the market that has fallen the least.”
Suri also remembered ‘big bull’ Rakesh Jhunjhunwala and quoted his words ‘Beta, apna time aa gaya hai’ to note that India will be the first market to breakout to lifetime highs and enter a decade of leadership backed by demographic shift propelled by domestic investors.
INFLATION: RISK TO INDIA’S GROWTH STORY
Suri noted that the price of commodities such as crude oil is the main risk to India’s economic growth. Crude is not a function of demand and supply and so much geopolitics is involved. “The way commodities are shaping up is a big worry,” he said.
“However, that would be a short-term risk. It doesn’t take away from the long, term story which I think, is still a demographic story,” he added.
Talking about the other risks, Desai said a minority government at the Centre is also a possible risk. What happens in the 2024 Lok Sabha elections will be important. “It won’t be a small event risk to Indian markets,” he added.
Meanwhile, Balasubramanian said the interest rate structure is changing and the risk associated with it cannot be ignored.
“As the interest rate goes up, the cost of capital goes up, and return on investment comes down. We may go though that cycle. We may face that risk,” he stated.