Outperformance Ahead: India Equity Strategy Playbook | Asia Pacific

Research evidence excerpt

Outperformance Ahead: India Equity Strategy Playbook | Asia Pacific

Foundation

July 6, 2026 03:09 AM GMT

Morgan Stanley India Company Private Limited+MIndia Equity Strategy Playbook | Asia Pacific Ridham Desai

Equity Strategist

Outperformance Ahead Ridham.Desai@morganstanley.comNayant Parekh +91 22 6118-2222

Nayant.Parekh@morganstanley.com +91 22 6118-1008

We argue India's relative de-rating is cyclical and with growth

acceleration in the pipeline, it has potential to reverse. With

depressed trailing performance and foreign ownership, this could

be very positive for equities going forward.

Is the de-rating of India valuations cyclical or secular? The secular argument rests Related research

on a lower terminal growth rate, driven by a falling fertility rate or by AI’s effect on India Equity Strategy and Economics: India's

India’s sizeable services economy and trade. We think both concerns are Transformation amid Next-gen Reforms

exaggerated. Slowing fertility – hardly abrupt – actually aids growth over the next Investor Presentation: Asia Summer School

two decades, even as it narrows India’s very long-term demographic edge. AI poses a 2026: India Equity Strategy

near-term risk to India’s services-export momentum but, over the medium term, MNC Sentiment Index (1Q26): Dip from Elevated

offers a substantial chance to lift labour productivity from a low base. Longer-term Levels

growth is further underpinned by a multi-polar world that can expand India’s share India Equity Strategy: "DREAM" Run: Non-SIP

of global goods trade, a widening consumer base and a marked pickup in Inflow Streak Snaps

investment. We therefore read the de-rating as cyclical – the product of a sharp gap Additional Levers to Support Capex Up-cycle