Morgan Stanley’s latest India Equity Strategy report revealed a positive shift in the multinational corporation sentiment, signaling a strong outlook for India’s economic growth and corporate performance. According to the firm’s proprietary MNC Sentiment Index, sentiment has rebounded significantly in the third quarter of 2024, recovering from a three-year low.
This uptick in sentiment is expected to have a substantial impact on India’s capital expenditure, balance of payments, corporate profits, and stock market performance.
The MNC Sentiment Index rose 13% sequentially in the third quarter, following a 4% decline in the previous quarter. On a year-on-year basis, it saw a 5% increase, compared to a 21% drop in the same period last year. This improvement in sentiment reflects the growing optimism about India’s evolving position in the global economy.
Factors such as India’s strengthening role in a multipolar world, the expanding consumer market, and government incentives for investments are driving increased interest from multinational companies.
India has undergone significant transformation over the past decade. With government continuity in place, the country has become an increasingly attractive destination for foreign investments, and is now one of the top picks in emerging markets, Morgan Stanley said.
The MNC sentiment gap between India and China has widened for the 13th consecutive quarter, with sentiment in China showing a slight decline.
From a regional perspective, MNC sentiment showed positive movement across all regions except Asia Pacific (excluding Japan). In terms of sectors, communication services and real estate were the standout performers, while financials emerged as the key laggard during the quarter.
What Is the MNC Sentiment Index?
Morgan Stanley’s MNC Sentiment Index is a machine-powered tool that tracks multinational companies’ perspectives on business conditions in India. It analyses quarterly result transcripts from companies listed in major global indices, scoring the sentiment of management commentary using a proprietary machine-learning program. The data, which stretches back to 2010, provides insights into long-term trends and offers real-time feedback on how MNCs view India’s business environment.
Implications For India’s Economic Outlook
The recovery in the MNC Sentiment Index is a key indicator of stronger investment prospects and corporate profitability. A favourable sentiment is typically associated with increased foreign direct investments, higher corporate profits, and positive movements in stock prices. Morgan Stanley suggests that the current sentiment could be a crucial driver of India’s upcoming capex boom, further boosting economic activity and market performance.
Based on these optimistic projections, Morgan Stanley has reiterated its overweight stance on several key sectors in its model portfolio, including industrials, financials, consumer discretionary, and technology. These sectors are expected to benefit most from the anticipated surge in investments and infrastructure development, driven by the positive sentiment among multinational corporations.
. Read more on Markets by NDTV Profit.This uptick in sentiment is expected to have a substantial impact on India’s capital expenditure, balance of payments, corporate profits, and stock market performance. Read MoreMarkets, Business, Notifications
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