Full-fledged Fin Recovery in 2018: Morgan Stanley

Wall Street investment bank Morgan Stanley said that India is all set for a full fledged financial recovery in 2018, undergirded by the first pronounced revival of private-sector capital expenditure in six years in Asia’s third-biggest economy.

With six years of continued deterioration in private capital spending, investors have remained skeptical of a turnaround in the cycle. One of the key drivers for private capex, Morgan Stanley says, is the expected rate of returns from the corporate sector, which had been cyclically depressed and, in turn, held back substantial private investment in assets.

Reflecting improved balance sheet fundamentals, the corporate sector, in aggregate, will be well positioned to enhance capex to meet higher demand.

The global bank also pointed out that the headline inflation gauge seems to be firming, and that there could be a case for raising rates in the second half of FY19.

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