The government thrust on digitisation could result in a threefold increase in India’s gross domestic product (GDP) and equity market capitalisation in the next 10 years, said Morgan Stanley.
“India’s digitisation drive has raised our confidence in long-term growth estimates. We forecast GDP to reach $6 trillion, equity market capitalisation to rise to $6.1 trillion and the market value of financials and consumer sectors to hit $1.8 trillion and $2 trillion, respectively, by 2027,” said the brokerage.
Ridham Desai, managing director, Morgan Stanley India, said, “Around 90 per cent of the market gains could happen in the next five years itself.”
The technological leap for India has come through reforms such as Aadhaar, an initiative to biometrically identify all citizens; Jan Dhan, a scheme aimed at providing bank accounts to every household; and the goods and services tax (GST), a unified and digital indirect tax.
“These reforms have digitised India and brought the country to an inflexion point in terms of growth, with a concomitant impact on stock returns, financial sector dynamics, consumption growth, and e-commerce activity,” said Morgan Stanley. The brokerage has also issued a list of stocks — mostly from the financial and consumption space —that could benefit by the ‘digitisation story”.
Bajaj Finance, Edelweiss, HDFC Bank, ICICI Prudential Life, Kotak Mahindra Bank, LIC Housing Finance and M&M Financial Services are the stocks in the financial space that could benefit. Among the consumption stocks are Asian Paints, Eicher Motors, ITC, Maruti Suzuki and Ultratech Cement. Morgan Stanley expects global stocks such as Alibaba, Amazon and Visa Inc to gain from the digital India theme.