Morgan Stanley’s Ridham Desai advises investing in these two sectors

At a time when trends related to demographics, digitilisation, deglobalisation and decarbonisation are affecting economies the

world over, India seems to be the only country that is benefiting from these trends, said Ridham Desai, Managing Director, Morgan Stanley India.

More importantly, the widely followed stock market veteran, while speaking at the India Today Conclave, said that India’s gross domestic product or GDP will double in the next 10 years with the per capita income expected to cross $5000-mark and stock market returns are also expected to be strong.

“Investors should focus on businesses that are facing inside India as those will benefit from the growth rates. The quintessential sector for everyone to buy is financial services as Indians and Indian companies are going to borrow money,” said Desai.

“India has a very unique position in the world as we have consumers at every level of the income strata. So, consumption and financial services will be my two pointed bets,” he added.

He also added that the set of companies that is comfortable with the ‘work from home’ arrangement will also do well.

On a different note, Desai highlighted the fact that the Indian markets have performed well in the last 15-20 years and are the second best in terms of returns.

“India is the second-best performing stock market in the world behind only the US in dollar terms,” he said.

Incidentally, he said that an important inflection point for the Indian stock markets came about in January 2015 when the government allowed retirement funds to invest in equities.

“The transition happened in January 2015 when the Modi government for the first time in India allowed retirement funds – provident fund and the national pension scheme – to buy stocks. They are buyers every month as they only get inflows,” he said highlighting the fact that a 20-year bull run was seen in the US after President Ronald Reagan allowed 401 plans to buy stocks. 

Meanwhile, he said that the 2024 general elections could be a “key domestic risk if in case a minority government is put in place”.