Morgan Stanley Sees India Investment Climbing To 37.5% Of GDP Amid Global Turmoil

International banker Morgan Stanley is seeing an opportunity amid the Middle East crisis, as India’s Investment-to-GDP ratio is expected to touch 37.5 per cent by FY30. It has increased its forecast for India’s investment rate, implying an extra $800 billion in cumulative capital spending over the next five years.

The banker believes the major capex boom could be seen in energy, data centers, and defence.

Morgan Stanley believes that this could take the market towards 10 times FY31 earnings, as it says in the note that higher capex should lift corporate profit share in GDP and support earnings growth of more than 15 per cent CAGR over the next five years.

Focus On Building Domestic Strength

In its note, the banker says that the ongoing Middle East crisis has prompted policymakers

to maneuver towards self-sufficiency in energy and critical sectors. It adds that policymakers are shifting gears to build domestic strength.

Energy, fertilisers, defence and data centers are in focus among the policy makers.

Positive GDP Growth And Sectors

Morgan Stanley sees India’s medium-term growth trajectory standing around 6.5-7 per cent, with the biggest investment push creating a virtuous cycle of higher capital formation and stronger corporate profitability.

The report highlights companies well-positioned for these themes (as of 27 April 2026). It maintains Overweight ratings on names such as Adani Power, Adani Energy, Larsen & Toubro, BHEL, JSW Energy, CG Power, NTPC, Polycab India, KEI Industries, Reliance Industries, ONGC, Deepak Nitrite, HPCL, Solar Industries, Bharat Electronics, and Bharat Forge.

However, it also reflects on key challenges including crude price movements, fertiliser subsidy pressures, execution of defence orders, and power availability for new data centres.