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India to become fastest growing large economy in 2018

India will become the fastest growing large economy in the world, eclipsing China, in 2018 and the country's equity market will jump to become the fifth largest in the world, a report says. 

According to a Sanctum Wealth Management report, when the rest of the world offers low growth and insufficient structural change, India, by contrast, is seen as a reforming economy with the prospect of strong long-term growth.

Sanctum is a Delhi-based professional wealth management company. At a time when developed economies are cheering 2-3 percent growth, India is focused on breaching 7.5 per cent, the report said.

Moreover, India also benefits from a favourable contrast to other emerging markets. In particular, the fact that China is down-shifting to a slower pace of growth.

 

"Prospective returns for equities are much higher than the 6-8 per cent 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, it said.

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 US Dollar against 8 billion US Dollar by foreign investors in 2017.

The report that identifies various big-picture trends at play this year in the domestic and global economy, noted that Aadhaar, Jan Dhan, Demonetisation, GST, are working to create a new inclusive infrastructure in India.

"Given the rapid pace at which the Indian economy is developing, investors today are faced with the need to make crucial investment decisions amidst multiple cross currents, using a complex array of choices," Sanctum Wealth Management Chief Executive Officer Shiv Gupta said. 


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