Morgan Stanley’s Ridham Desai tells how stock markets can sustain current rally

Ridham Desai continues to back domestic cyclical mid-cap value stocks from a portfolio perspective.

Even as the stock markets are booming, the economic growth needs to revive for them to sustain, said a veteran investor. However, the stock prices are out of the fear zone as of now, Ridham Desai, Managing Director, Morgan Stanley India, told ET Now. The indicators for stock markets are currently mixed, but trending up rather than down, he also said. Adding, he said that the Indian equities are expected to beat the emerging market index in the coming 12 months. Ridham Desai continues to back domestic cyclical mid-cap value stocks from a portfolio perspective. The stock markets are on a high for some time now.

The key equity indices closed marginally higher on Monday, led by gains in banking stocks. Investors now await India’s industrial production data for September. The benchmark Sensex gained 21.47 points or 0.05% to close at 40,345.08 points. The Nifty 50 index gained 5.30 points or 0.04% to close at 11,913.45.

Earlier this year, Ridham Desai MD of Morgan Stanley had said in an interview with CNBC-TV18 that he expects the index to reach 30,000 points — that’s for NSE Nifty, not for BSE Sensex — in the next five years, on the back of renewed consumption, greatly improved exports and infrastructure spending by the government. This roughly works out to a CAGR of 25.33% for the Nifty over the next five years. We take a look at five key reasons why Morgan Stanley sees Sensex topping 1,00,000 points even in the base case scenario

Meanwhile, India’s GDP growth is expected to fall further in the second quarter after touching a six-year low in the first quarter of FY20, SBI said in a research note on Tuesday. India’s GDP growth forecast for the ongoing fiscal to 5 percent from 6.1 percent earlier, owing to global economic slowdown coupled with domestic concerns.