India witnessed a bear market every time the US slipped into a recession but this time, India may not see a bear market if the US slips into a recession, said Ridham Desai, MD, Morgan Stanley, in an interview with ET Now.
"In India, the stock market has gone into a bear phase with every US recession. So a US recession means a bear market. Some of them are terrible to bear markets but we get bear markets. I dare say that if the US slips into recession next year or later this year, we may not get a bear market this time in India and that is the transition that happened," said Desai.
Desai highlighted three major policy changes that have been enacted in the last five, or six years that have added strength to the Indian economy.
"So the first couple of changes came in 2015. The government transitioned or rather mandated the RBI to target inflation. Secondly, the prime minister through policy allowed the retirement funds in India, National Pension Scheme and provident funds to invest in equities for the first time. The third thing was the shift towards corporate profits which happened in September 2019. The government surprised us by cutting corporate taxes quite significantly and it set the stage for improving corporate profits to GDP," Desai said.
Desai believes will see a huge amount of capex in energy, consumption-related sectors, and infrastructure, in many sectors which will lead to greater prosperity.
"This is the new India that is now, therefore, more insulated from a European I would say demographics/energy shock slowdown, from a China on a Covid policy shock slowdown and in the US where maybe they have erred on policy and therefore they are actually facing problems. We are actually looking very different from the rest of the world," Desai said.
Disclaimer: This article is based on an ET Now interview. The views expressed here are of the analyst and not of MintGenie.