At a time when most economies in the world are moving at a sluggish pace, India, by contrast, is seen as a reforming economy with the prospect of strong long-term growth. In addition, the stock markets will become the fifth largest in world by 2018, Sanctum Wealth Management report said. “Prospective returns for equities are much higher than the 6-8 percent that one can expect from fixed income,” it noted. However, if inflation or rates rise, markets are not likely to register further gains. Muted earning could also impact market performance. “Considering the fact that Nifty50 is in a broader uptrend, a sustained move beyond the 10,490-10,580 levels could lead to a rally towards 11,200-11,500 levels in the medium term,” it noted.India will overtake China to be the fastest growing large economy in 2018 and the country’s equity market will become the fifth largest in the world, a report said.
“India will become the fastest growing large economy in the world, eclipsing China. Indian equity market will jump to become the fifth largest in the world,” the report said. Moreover, India also benefits from a favorable contrast to other emerging markets. In particular, the fact that China is downshifting to a slower pace of growth. As per the report, a major factor that has changed is that the domestic buyer now sets market prices. Domestic mutual funds bought equities worth $15.3 billion against $8 billion by foreign investors in 2017.
The World Bank is estimating India’s economy to grow by 6.7 percent during the current fiscal year, higher than the 6.5 percent estimate by the Indian government. The Gross Domestic Product (GDP) growth is expected to rise to 7.3 percent in 2018-19, making India again the world’s fastest growing economy, according to the World Bank’s Global Economic Prospects report released on Tuesday. The report dropped the growth estimate for 2017-18 by 0.1 percent from its projection June 2017, because of the disruptions to the economy from the Goods and Services Tax (GST). But it raised the growth forecast for 2018-19 by 0.1 percent from the June figure. The Bank forecast GDP growth of 7.5 percent in 2019-20 and 2020-21.