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India’s domestic demand-based high-frequency data rose on a sequential basis, even as it slowed in year-on-year terms in March, global brokerage Morgan Stanley said.

“Domestic demand improved on a sequential basis in March, while macro stability reflects strength in the fundamentals. We maintain our constructive outlook on the economy," the brokerage said.

Revenue from GST collections came in at Rs 1.78 trillion, up 12.5 per cent YoY, and taking the F2024 average to Rs 1.68 billion. Manufacturing PMI rose to a 16-year high of 59.1, while Services PMI inched up to 61.2, supported by buoyant demand conditions and efficiency gains, improving overall business conditions, analysts at Morgan Stanley said.

“On growth, we remain constructive on the growth outlook, given support from domestic demand, as reflected in the robust trend in high-frequency growth data. As such, we expect GDP growth at 6.8 per cent in F2025 and 6.5 per cent in F2026,” Morgan Stanley said.

“With regard to macro-stability, we anticipate headline inflation to remain supported by favourable base effects and thus remain in a range around 5 per cent YoY in 2Q24, while it softens to 4.1 per cent YoY in 2H24,” Morgan Stanley said.

Similarly, the current account deficit is likely to remain benign, supported by strength in services exports, and remain within the policymakers' comfort zone at 1-1.5 per cent of GDP in F2025-26, the brokerage said.

“On monetary policy, we expect policy rates to remain steady at 6.5 per cent in our forecast horizon,” the brokerage said. This is on the back of a shallower and deferred rate cut cycle for the Fed on the global front and improving productivity growth, rising investment rate and inflation tracking above the target of 4 per cent on the domestic front.