India is expected to see an increase in investment, according to Morgan Stanley, which named several stocks it believes could benefit from increased capital spending in economic power. In a note titled “How to play India’s next investment boom,” Morgan Stanley analysts said they expect supply-side factors and align with improving demand. , which would boost investment in gross domestic product. “A likely boom in investment spending makes Indian stocks inexpensive,” wrote Morgan Stanley analysts led by Girish Achhipalia. “The most important ingredient of profits is the rate of investment. In turn, higher profits stimulate investment, creating a virtuous circle of higher wages, more consumption, more investment and more profits. ” The bank projects that India’s investment rate will reach 36% of its GDP over the next five years, up from the current rate of around 31%. This implies that capital expenditure could increase by a compound annual growth rate of 16.7% until 2027, the bank added. India is the world’s fifth largest economy and is expected to post a GDP of $3.53 trillion in 2022, according to the International Monetary Fund. Stock Picks Morgan Stanley sees industrials and financials as the main beneficiaries of the capital spending boom. “Capital goods, engineering and construction as well as major banks are directly driving the rise in investment spending in India,” Achhipalia added. One of the bank’s top picks is India’s largest construction firm Larsen & Toubro. The bank believes L&T is “ideally positioned” to benefit from investment growth, with the share price having a “high correlation” to public investment. The stock is also attractively priced, Achhipalia added. Morgan Stanley has a price target of 2,178 Indian rupees ($27.50) on the stock, which closed at around 1,962 Indian rupees on Monday, representing a potential upside of 11%. Read More Forget oil – coal is hot right now. Here are 2 stocks to play in, according to the pros, the British pound has fallen against the dollar. Here’s how low it could go, according to the pros Want to invest in real estate? These REITs are among the favorites of analysts Morgan Stanley also likes ICICI Bank and State Bank of India (SBI). “Banks with a liquidity or liability franchise are best positioned to generate profitable revenue growth… Larger banks are best positioned to capitalize, in our view. ICICI and SBI remain our preferred choices to play the cycle of ‘investment,” Achhipalia said. Achhipalia believes ICICI is one of the best positioned private banks to generate strong earnings in the current cycle and has assigned a price target of 1,225 Indian rupees to the stock. Shares of ICICI closed at around 907 rupees on Monday, implying a potential upside of 35.1%. It has also “significantly” increased its loan growth for SBI, India’s largest public sector bank. The stock is also trading below its long-term average, making it attractive from a valuation perspective. Morgan Stanley has a price target of 675 Indian rupees on SBI, which closed at around 555 Indian rupees on Monday – an implied rise of 21.6%.
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