Indian Stock Market Set to Thrive at the Start of 2025: Report
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Mumbai, Jan 2 (NationPress) Indian equity indices are set to progress at the start of 2025, driven by a projected recovery in earnings, aided by an upsurge in rural spending and an increase in government expenditure, according to a report from the Bank of Baroda (BoB) issued on Thursday.
Both Sensex and Nifty 50 experienced growth of 8.7 percent and 9 percent, respectively, in CY 2024. The Sensex reached an all-time high this year, surpassing the 85,500 threshold. Sectors such as real estate, consumer durables, and IT emerged as some of the top-performing stocks in CY24, the report highlighted.
The government continues its commitment to fiscal prudence, with plans to reduce the fiscal deficit to 4.9 percent of GDP while aiming for a gross borrowing target of Rs 14 lakh crore.
Expectations for an interest rate cut by the RBI are making a comeback, possibly commencing in February 2025, after rates have remained steady at 6.5 percent since February 2023, as mentioned in the report.
The report indicated that the rupee fell by 2.8 percent in CY24 but still performed better compared to its counterparts.
The Reserve Bank of India (RBI) has continued to intervene in the forex market to mitigate currency weakness. A stable Current Account Deficit (CAD) and declining oil prices also provided support to the rupee,” stated Jahnavi Prabhakar, an economist at the Bank of Baroda.
“In CY25, the rupee is anticipated to experience slight depreciation as fluctuations in FPI flow may persist due to a potentially stronger dollar,” she added.
On the bond front, the report noted that the US Federal Reserve initiated a monetary easing cycle in September 2024, marking its first rate reduction in three years.
While there were initial expectations for further rate cuts, the Fed tempered any such reductions in CY25 to just 2 cuts, adjusting the federal funds rate to the 3.75-4 percent range.
Despite these cuts, yields remain elevated, indicating that inflation risks continue to be a concern, the report stated.
“In CY25, uncertainty looms due to potential impacts from policies introduced by the Donald Trump administration, which could be inflationary,” the report concluded.
