With the economy seeing a fall in growth, the Indian economy needs stimulus as fiscal target remains tight, said an emerging market veteran. Even as the main reason for the slowdown, both domestic and global, lies in manufacturing, traded goods and corporate capex, the earnings may soon see a revival for the Indian companies, Jonathan Garner of MorganStanley told CNBC TV18. Among the key measures suggested include continued rationalization of goods and services tax (GST) rates, a new direct tax code to streamline direct taxes and continued prioritisation of infrastructure spending.
These measures may largely help the government to stabilise the foreign portfolio flows and boost the economic growth, he added. India’s relative performance to other emerging markets has been impressive and quick action on PSU bank recap is top of Morgan Stanley’s to monitor, said Jonathan Garner. The PSU banks need a recap boost of more than Rs 70,000 crore, the renowned analyst also said. Finance Minister Nirmala Sitharaman on Friday proposed an allocation of Rs 70,000 crore for public sector banks (PSBs) so as to improve the rate of credit in the economy.
The stock market may be seeing a continued sell-off as of now, the scenario may improve in the coming days, he added. Morgan Stanley maintains a target of 45,000 for the Sensex. Morgan stanley is overweight on India and has it as its second top market after Brazil, he added. The markets are seeing a sharp sell-off by the FPIs since government proposed levy of an additional surcharge on ‘individuals and trusts’ earning more than Rs 2 crore and Rs 5 crore, respectively, following which the FPIs started a mass exodus from the country.