Synopsis
Bernstein's report suggests India is on the verge of economic growth, estimating a GDP increase of 6.5% for the next year, despite global uncertainties. The country's economic recovery often outpaces the US, and lower commodity prices due to a potential US recession may aid inflation control and strengthen the rupee.Key Takeaways
- India's GDP growth is projected at 6.5%.
- Bernstein maintains a positive outlook on the Nifty index.
- A US recession could lower commodity prices.
- Domestic market participation remains strong despite foreign outflows.
- Interest rate cuts may catalyze economic recovery.
New Delhi, March 25 (NationPress) India’s macroeconomic landscape has reached its lowest point, and the nation is projected to experience a GDP growth of approximately 6.5 percent in the upcoming year, as indicated by a Bernstein report released on Tuesday.
In light of geopolitical tensions such as the potential for a US recession and reciprocal tariffs, Bernstein’s strategy for India presents an optimistic forecast for the economy in the near future.
“In spite of global uncertainties, India is strategically positioned to capitalize if a US recession occurs,” remarked the global brokerage in its report.
India’s economic growth pattern has frequently shown independence from the US economy, with historical data illustrating that India typically rebounds faster than the US during economic downturns.
Although broader markets have encountered corrections, India is anticipated to gain as the global trade climate stabilizes.
The Bernstein report maintained a favorable outlook on the Nifty index, establishing a year-end target of 26,500, while also advising caution due to potential fluctuations in market sentiment driven by international events.
A possible US recession could also lead to decreased commodity prices, which would be advantageous for India, Bernstein noted.
Commodities such as crude oil, copper, aluminium, and steel, which are closely tied to US economic performance, might experience lower prices, it added.
This reduction in prices would lessen India’s import expenses, assist in controlling inflation, and relieve pressure on the Indian rupee.
Moreover, the prospect of interest rate cuts could serve as a catalyst for economic recovery in the latter half of the year, according to the report.
Despite recent withdrawals of foreign institutional investments, domestic market engagement remains robust.
The Indian stock market continues its strong upward trajectory driven by several key elements, including expectations for a rate cut by the Reserve Bank of India (RBI), significant buying from both domestic and foreign investors, and a positive perspective on the Indian economy from global analysts.
A stable Indian rupee, ongoing purchases by domestic institutional investors (DIIs) and foreign institutional investors (FIIs), along with Morgan Stanley’s latest optimistic outlook for the Indian economy and inflation, have further enhanced investor sentiment.
