India's GDP beat all expectations to grow at 6.2% in 2022-23, and the country remained one of the fastest-growing economies in the world. Strong PMI data, released a day after the GDP numbers, showed that this growth was not a flash in the pan and that the momentum continues well in the current fiscal year.

Manufacturing PMI rose to a 31-month high of 58.7 in May from 57.2 in April. Services PMI is yet to be released, but the stage is set for an encore after it hit 62.0 in April, the strongest expansion since 2010.

The markets have had some good news to bask in. Various data sets, including the fall in inflation in April, have generally been better than expected.

And then, two separate research reports caught the market's attention.

The first was from Christopher Wood of Jefferies, the famed author of Greed & Fear research notes. Wood reiterated that the Sensex would hit 100000 over the next five years from its current level of around 62000, buoyed by what is being done by the Narendra Modi government.

The second was a report from Morgan Stanley that praised the transformation of India in the last ten years.

"This India is different from what it was in 2013. In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook," Morgan Stanley said in a note released on May 29.

Here are the top takeaways from these reports that have gone viral among market participants, as, after all, nothing works better than a feel-good story. First from Woods:

Benign Interest Rates: The monetary tightening cycle is ending, with inflation falling in recent months. The Reserve Bank of India has kept its policy repo rate unchanged at 6.5%, and inflation is expected to run around 5% for the rest of the year.

Political Season: India is approaching a general election. Despite the recent victory of the Congress party in Karnataka, the Narendra Modi-led BJP government is expected to be re-elected, albeit potentially with a reduced majority.

Transformation of Infrastructure: There is a significant improvement in India's physical infrastructure, which has addressed previous deficiencies. This improvement is expected to lead to an increase in the return on capital. This transformation is being led by dedicated freight rail corridors that will reduce transportation time and logistics costs.

Targeted Welfare and Digital Payments: Direct Benefit Transfer and the Unified Payments Interface have reduced leakages in welfare distribution.

India's Self-Confidence and International Standing: India's self-confidence has increased in the past decade. There is already talk of India becoming a major beneficiary of production moving out of China.

Oil Imports and Current Account Deficit: India's purchases of cheap Russian oil have been growing, and the country's macro vulnerability to higher oil prices has decreased over the past decade. The current account deficit appears to be in a long-term downtrend.

Stock Market and Property Sector: Stock market has traded sideways, allowing earnings growth to catch up with valuations. The property sector has been experiencing an upturn. Wood suggests that exposure to property stocks be added as the end of the monetary tightening cycle approaches.

Capex Cycle: India could be on the brink of a significant capital expenditure cycle, supported by an increase in gross fixed capital formation and new project announcements by the private sector. This has positive implications for industrial stocks.

On its part, Morgan Stanley says:

• India's export market share will rise to 4.5% by 2031, nearly two times from 2021 levels. It will be broad-based across goods and services exports.
• India's per capita income will more than double from $2,200 currently to $5,200 by 2032. This will give impetus to discretionary consumption.
• Inflation is seen to remain benign and less volatile, implying shallower rate cycles. Shallower rate cycles could also imply more benign equity market cycles.
• The share of profits in GDP has doubled from all-time lows hit in 2020 and is set to rise further. It may even double from present levels.
• The lower share of foreign portfolio investments in current account funding has reduced the stock market's negative return correlation with oil prices.
• India's reliance on global capital market flows has reduced, and the market's sensitivity to a US recession and US Fed rate changes is also fading.

Morgan Stanley says there will be "higher for longer" growth in India, which calls for a re-rating valuation.

Indian markets have a lot to look forward to.

Chief Economic Adviser V. Anantha Nageshwaran claimed in February that India would be a trillion-dollar economy in 10 years. If these two research reports from Jefferies and Morgan Stanley are anything to go by, it will take an extraordinary effort to derail India from that path to a trillion-dollar economy.