‘MF assets may zoom to $1.9 t’

Morgan Stanley Research expects the assets under management of mutual funds to register a compounded annual growth of 22 per cent to $1.9 trillion (about ₹125 lakh crore) from $273 billion over the next 10 years. The growth will be largely backed by the government’s push on digitisation boosting the economy and earnings of individuals.

In a report titled ‘India’s Digital Leap — the Multi-trillion Dollar Opportunity’, it forecasts domestic equity AUM to touch $1 trillion ($111 billion) with domestic equity inflows touching $420 billion ($60 billion) in the next 10 years.

The global research firm expects the Sensex to settle at 33,000 points by the end of this fiscal and scale up to one lakh points in 10 years. In the financial space, it sees Bajaj Finance, Edelweiss, HDFC Bank, ICICI Prudential Life Insurance, Kotak Mahindra Bank, LIC Housing Finance and M&M Financial Services to benefit from bullish economic growth, and higher consumption to boost Asian Paints, Eicher Motors, ITC, MakeMy Trip, Maruti Suzuki and UltraTech Cement.

Ridham Desai, Equity Strategist, Morgan Stanley Research, said the Indian capital market could become the world’s best performer with market-cap rising to $6 trillion in 10 years from $2 trillion currently, led by financial and consumer sectors.

“We estimate digitisation to provide 50-75 basis point boost to GDP with India becoming a $6-trillion economy and achieving upper-middle income status by FY27. We expect India’s real and nominal GDP to record compounded annual growth of 7.1 per cent and 11.2 per cent (10.2 per cent in dollar terms) over the decade,” he said.

In line with the bullish outlook, he sees the FDI inflow into the country touching $120 billion by 2027, almost doubling the current trailing 12-month rate of $64 billion.

Interestingly, the report does not consider the geopolitical tensions building up between the US and North Korea as a threat to India’s economic growth even while expecting a global recession such as the one in 2008 upsetting its predictions.

On the domestic front, it lists the country’s political instability and shift in policy from digitisation as key risks.

It also sees cyber security and privacy issues derailing the Aadhaar-drive testing its bullish view on India. The GST roll-out has begun well but it is still a work-in-progress. In the short run, there could be disruption to smaller businesses causing job losses and a general slowdown in economic growth, it said.

If there are roadblocks, the country’s GDP may settle at $5.5 trillion, implying a growth of 9 per cent and market capitalisation touching $5 trillion over 10 years.