Indian shares took a tumble after Fitch downgraded the US’s credit rating, and hot money fled West, so news of a more sober analysis of the prospects of local assets was welcome. Morgan Stanley has lifted its allocative view on India to “overweight” from equal weight, ranking it at the top of its league of most preferred emerging markets, up from sixth position. That’s a remarkable jump. The same can be said of India’s services purchasing managers’ index (PMI), which struck a 13-year high of 62.3 in July, up sharply from 58.5 in June. Services alone account for more than half of India’s gross domestic product, and their healthy showing should keep the broader economy in good shape. But there have been other indicators as well, such as goods and services tax revenue, freight activity and automobile sales, that point to the economy’s post-pandemic momentum. Manufacturing is improving, and while agriculture may yet turn into a patchy performance because of a lopsided monsoon, our domestic growth drivers are mostly faring fine. Private investment could be on the verge of a long-awaited revival. With a debt overload now in the past, capital formation could deliver a boost.
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Updated: 04 Aug 2023, 12:10 AM IST