Indian Stock Market Poised for Growth Amid Strong Economic Surge in 2025
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Mumbai, Dec 30 (NationPress) The Indian benchmark indices in 2025 are poised to benefit from robust economic expansion and government initiatives focused on enhancing infrastructure and digital advancements, as per experts on Monday.
Sectors such as capital goods, technology, financial services, consumption, and healthcare are anticipated to flourish, while emerging sectors like semiconductors, electronics manufacturing, renewable energy, and electric mobility are expected to gain prominence, according to Deepak Ramaraju, Senior Fund Manager at Shriram AMC.
Despite a tumultuous and eventful year characterized by increased volatility, Indian equities have remained buoyant. The market faced fluctuations due to various global events, a slow-down in the Indian economy, tighter liquidity conditions, and deferred government expenditure.
Ramaraju remarked, “Nevertheless, a recent reduction in the CRR is likely to alleviate liquidity issues, which will be followed by a surge in government spending. These two factors should enhance overall consumption and foster an uptick in industrial production.”
The government's capital expenditure until October 2024 reached Rs 4,66,545 crore.
As the government ramps up investments in the latter half of this fiscal period, sectors such as infrastructure, defense, and railways may experience a rebound.
According to Ramaraju, “FMCG, which suffered from a slowdown in urban consumption, could see a recovery as valuations appear attractive. Additionally, with a revival in government spending and a potential interest rate cut in the first half of CY25, urban consumption is expected to recover.”
The IT sector, having already bounced back from its lows post-rate cuts, is likely to perform well in 2025 as discretionary spending increases, provided there are no unexpected tariffs imposed by US President-elect Donald Trump.
Banks are also expected to experience a recovery following interest rate cuts, which may lead to an increase in credit growth. Furthermore, the recent CRR cut of 50 bps (in two phases) is anticipated to enhance liquidity and credit growth in the banking sector, according to experts.
The Bajaj Broking research team noted that 2024 has been a remarkable year for Indian equity markets, particularly for small-cap and mid-cap indices, which have significantly outperformed.
This outstanding performance is attributed to strong domestic liquidity, with domestic institutional investors (DIIs) consistently being net buyers, along with increased retail participation through SIPs. Broader economic tailwinds, including an above-average monsoon and strategic sectoral rotation, further bolstered the upward trend.
The research team stated, “Looking forward to CY25, the small-cap and mid-cap indices are expected to continue their upward trend. The Nifty Smallcap index, which recently broke above multi-year resistance levels, is projected to reach 22,700, while the Nifty Midcap index is anticipated to hit 67,700.”
These forecasts are supported by a robust domestic economy, pro-growth policies in the Union Budget, and expected rate cuts of 75–100 bps by the RBI, creating favorable conditions for sustained growth in these segments.
