EXCLUSIVE | Current bull market on Dalal Street to be longest ever: Morgan Stanley's Ridham Desai

In an exclusive interaction with Zee Business Managing Editor Anil Singhvi, Ridham Desai, MD and Chief Equity Strategist-India,Morgan Stanley exuded full confidence on the current bull run in the Indian markets. The expert expects the current bull run market to sustain for 4-5 years and advises investors to capitalise on every ‘buy on dips’ opportunity.

Starting with the highlights of the recent Morgan Stanley conference, Desai stated that interest in the Indian markets is at peak and Indian investors are only worried about the high valuations. Further, the expert asserts that India will see massive FII flows in the next six months and both domestic institutional investors (DIIs) and FIIs will buy into the Indian equities.

For new investors, Desai cautioned that the share market does not move in a straight line and instead is highly volatile. So, amidst the volatility and the current bull run which is seen to continue for quite long, investors need to know that they have to buy on dips. The expert added that historically the current bull market in India is expected to be the longest and will last for at least 4-5 years more.

Why are Indian markets rising?

Desai answering this question said that India over the last ten years has been focusing on its macro stability through varied reforms, and in the process has been successful in reducing the high volatility in inflation, and this, in turn, has curbed volatility across India's bond markets, rupee and the capital markets. Further, the expert opined that due to the centre’s focus on macro stability, this growth will be far reliable.

Here are the other key takeaways from Desai’s interaction

Morgan Stanley Sensex Targets

Bull Case             92,000           (Probability 30%)
Base Case           82,000            (Probability 50%)
Bear case           63,0000            (Probability 20%)

So, in the base case which has the highest probability, Morgan Stanley sees Sensex to touch 82,000 levels, implying potential upside of nearly 6 per cent from the previous day’s closing levels. Importantly, the market expert iterated that in order to create wealth from the equity markets, one needs to have a long term view of at least 10 yeras. Further, while he stated that India currently ranks 5th globally in terms of market capitalisation, it can easily come to the second spot over time. And investors over 10 years will be able to earn a 12-15 per cent annual return.

Modi 3.0 Stability returns- Positives for India Markets

India’s macro stability
Likely fall in the primary deficit
Growing domestic equity savings pool
Improving social equity
Fast evolving deep tech sector
An impending loan boom
Shifts in external dynamics
 
Risks for Indian markets-

Capacity constraints in bureaucracy
Judiciary
Healthcare
Education
Slowdown in global growth can hurt India’s growth as well as funding
Low farm sector productivity

Stocks & Sector Specific-

Market veteran in view of the larger macros prefers cyclicals over defensives and market capitalisation-wise, he likes largecaps over small and midcaps.  Desai further is overweight on Financials, Technology, Consumer Discretionary & Industrials. While his investment themes for the next five years are Consumer, Energy, Financials & Industrials.