The Economic Survey tabled in Parliament earlier this year “conservatively” projected India’s real GDP growth at 6.5-7 per cent for 2024-25, acknowledging that market expectations are higher
Our Bureau
New Delhi
Indian corporates are expected to witness improved earnings in upcoming quarter which will drive in returns in the new year, stated the Mirae Asset Mutual Funds stated in its Annual Market Outlook 2025 report. However, the report highlighted that despite higher valuations at the start of the year, equities did well with mid and small caps delivering double digit returns.
It added that the stocks are still the favorite investment choice in the markets because they have the potential for good returns, but it’s important to have a mix of different types of investments (stocks, bonds, etc.) to reduce risk.
The report added that India’s medium to long term outlook remains robust driven by strong macro fundamentals deleveraged corporate balance sheets, robust asset quality, fiscal discipline, favorable demographics, digitization, rising income levels, etc.
Household debt levels are also reasonable compared to global standards. India’s aggregate debt to GDP is lower than in 2010, while it has risen globally, the annual market report added. “We remain constructive on equities from a medium-term perspective driven by strong profitability and free cash flows. Earnings growth may be a key driver of returns in 2025. Given that valuations are trading at a premium and there is froth in certain segments of the market, bottom-up stock selection will be important,” the report added.
On the Sectoral front, the report expressed its confidence, adding that it remains constructive on Banking & Financial Services given the reasonable valuations and higher return ratios – ROE (Return on Equity) and ROA (Return on Assets).
“We are also hopeful of revival in consumption and positive on manufacturing given the Government’s thrust and China+1 strategy,” the report added.
Year 2024 was a year of elections with more than half of world’s economy by GDP and population undergoing election including India and US.
While India is broadly seeing policy continuity, it would be interesting to watch out for policies adopted by the new administration in US particularly on trade, immigration, deregulation, taxes and government expenditure. This will have a bearing on trade and financial markets globally, the report added.
Indian capital markets saw a record surge in primary equity issuances while domestic investors continued to be big buyers in secondary market.
Foreign Portfolio Investors (FPI), on the other hand, have remained on the side lines owing to their discomfort on higher valuations.
Any significant correction in Indian equities may lead to Foreign Portfolio Investor (FPI) inflows going ahead, the report added.
Meanwhile, Finance Minister Nirmala Sitharaman on Thursday met stakeholders from the financial sector and capital markets as part of her series pre-Budget consultations. The meeting was also attended by Finance Secretary, DIPAM secretary, and secretaries of Department of Economic Affairs and Department of Financial Services, and Chief Economic Adviser to the Government of India.
The Finance Ministry conducts several pre-budget consultation meetings annually with experts, industry leaders, economists, and state officials. The formal exercise to prepare the annual Budget for the next financial year has already begun.
Sitharaman has so far held a series of meetings with various stakeholders, including with MSMEs, farmers’ associations, and economists.
Prime Minister Narendra Modi also interacted with a group of eminent economists and thought leaders in preparation for the Union Budget 2025-26 at the NITI Aayog premises last week.
This upcoming budget comes in the backdrop of weak GDP numbers and weak consumption in the economy.
The Reserve Bank in its latest monetary policy had cut India’s growth forecast for 2024-25 to 6.6 per cent from 7.2 per cent. The Economic Survey tabled in Parliament earlier this year “conservatively” projected India’s real GDP growth at 6.5-7 per cent for 2024-25, acknowledging that market expectations are higher. Real GDP growth is the reported economic growth adjusted for inflation.
India’s GDP grew by an impressive 8.2 per cent during the financial year 2023-24, and continued to be the fastest-growing major economy. The economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.
