NEW DELHI: The Indian market might not have done much, but the real economy has improved considerably so far in 2015, say experts. That fundamental strength makes India stand out among the fragile five, of which it was once a part in 2013, they say.

Back in 2013 when the US Federal Reserve announced tapering of its stimulus programme, quantitative easing, Morgan Stanley identified five major emerging markets with the most vulnerable currencies. They included Brazil, India, Indonesia, Turkey and South Africa.

“When you compare India today with the situation in 2013, the macros look far better in a relative sense, relative to our own history and relative to peer group,” Amay Hattangadi, Executive Director, Morgan Stanley Investment Management, said in an interview with ET Now.

“Back then (2013), we were put in a basket with the fragile five along with Brazil, Indonesia, Turkey and South Africa, but if you look at the improvement in current account since then, it has been significant,” he said.

Hattangadi says India is less volatile and less fragile today than it was in 2013 and in that sense probably it is more prepared for a crisis. “But that does not mean we are going to be decoupled, fully immune, not see any volatility at all. That is not going to be the case,” he said.

Improved macros, stable currency, falling inflation, easing monetary cycle and controlled fiscal deficit all make India a much better investment destination compared with other emerging market economies.

“Our construct of looking at these things is, we think about a place like India as a good house in a bad neighbourhood, the bad neighbourhood being the emerging markets,” says Swanand Kelkar, Executive Director, Morgan Stanley Investment Management.

“Emerging markets today are such that it is difficult to make a case for them. Their growth differentials versus developed markets have come down. A lot of them are commodity dependent and commodity prices are going down,” he said.

Kelkar is of the view that at some point of time, the bad neighbourhood narrative will be ascendant when people will start getting all worried about what is happening to China, what is going on in Brazil and what is happening to the Malaysian currency.

“But at another point, the India story — fundamentally doing the right stuff, broadly on the right track, not as vulnerable as you thought it is — will be ascended,” he said.

Clearly, from a macro point of view, the rupee has depreciated against the US dollar, but it has appreciated against various emerging market currencies. Inflation is around 5 per cent, while GDP growth is holding above 7 per cent.

“If we look at what the RBI governor has just said in the recent credit policy, it looks like we still have a lot of room to grow and that growth is not going to be inflationary, because capacity utilisation is still in that 70-75 per cent band,” Nilesh Shah, MD & CEO, Envision Capital, said in an interview with ET Now earlier this month.

“He actually mentioned a 72 per cent number, which means even for the next couple of years, we could sustain the current growth rate without having any impact on inflation. That is an extremely positive situation to be in. I clearly think this is India’s goldilocks moment. When it comes to investment, the fatal mistake which perhaps most investors end up making is to basically paint everything with the same brush…” he concluded.