The GST simplification, income tax reductions and central bank easing are set to boost consumption in India, according to a new report by UBS, which has 'Attractive' view on Indian equities amid expectations for earnings recovery, as the multinational investment bank turns bullish on emerging markets (EM).
According to analysts at UBS, "We upgrade EM equities (MSCI EM) to Attractive, reflecting a constructive macro backdrop, and improving financial conditions on the back of Fed easing and a softer US dollar. Our preferred markets are Mainland China, India, Brazil, and Indonesia".
The case for investing in EM equities has evolved significantly since the launch of the asset class as a large number of EM stocks are much more than a play on commodities and financials, according to the financial services firm.
"In sum, alongside the US, emerging markets are among the few regions globally offering direct exposure to structural tech growth," UBS noted.
Emerging markets are also portfolio diversifiers, as it comprises domestically-driven economies like India to more cyclical ones like Brazil.
UBS has raised their MSCI Emerging Markets targets to 1,420 for December 2025 (up 2.2 per cent from the current 1,389) and 1,470 levels for June 2026.
The latest International Monetary Fund (IMF) regional economic outlook report for Asia has said that India's economy is projected to expand at a healthy pace of 6.6 per cent this year (FY26), up from 6.5 per cent in 2024 (FY25) -- owing to strong Q2 growth and GST 2.0 reforms.
The forecast for India has improved since April 2025 as strong Q2 growth and the goods and services tax (GST) reform are expected to outweigh the negative effects of higher US tariffs on demand for Indian goods.
"Economies in the Asia-Pacific region have been resilient in 2025, posting stronger-than-expected economic growth in the first half of the year amid external and domestic challenges. Nevertheless, higher US tariffs and increasing protectionism will likely reduce demand for Asian exports and eventually weigh on growth in the near-term," said the IMF.
(With inputs from IANS)
