Will Indian Equities Shine in the Medium-Term Amid Policy Support and Strong Private Capex?
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Synopsis
Despite facing global uncertainties, Indian equities show a positive medium-term outlook. Supported by domestic growth drivers and policy support, experts anticipate a recovery in private investments and infrastructure development. This article explores the key factors driving India's economic resilience and the potential for significant growth in the coming years.
Key Takeaways
- Indian equities show a positive medium-term outlook.
- Supportive policies and domestic growth drivers are key.
- Private investments are expected to rise, particularly in renewable energy.
- Global commodity prices are favorable for India.
- The Production Linked Incentive scheme may boost capital expenditure.
New Delhi, Dec 17 (NationPress) In spite of prevailing global uncertainties, the medium-term prospects for Indian equities appear promising, bolstered by domestic growth catalysts and supportive policies, according to a report released on Wednesday.
The analysis from HSBC Mutual Fund indicates that India’s growth trajectory remains robust in the face of considerable global macroeconomic hurdles, with resilience likely to persist due to easing crude oil prices and various domestic elements.
A normal monsoon season, favorable interest rates, and a conducive liquidity environment are additional contributors expected to propel growth, as reported.
“While global trade uncertainties pose challenges to private capital expenditure in the short term, we anticipate that India’s investment cycle will trend upward in the medium term, aided by government spending on infrastructure and manufacturing, a resurgence in private investments, and a revival in the real estate market,” the report stated.
The fund highlighted encouraging market trends, including a recovery in private capital expenditure, robust demand for real estate in urban centers, and favorable global commodity pricing.
“We foresee increased private investments in renewable energy and associated supply chains, localization of high-tech components, and India becoming a more integral part of global supply chains, all of which will foster accelerated growth,” noted HSBC MF.
According to industry capacity utilization data from the RBI, levels are reasonably high, and the ongoing expansion of the Production Linked Incentive (PLI) scheme could further stimulate private capital expenditure, the report projected.
The government’s GST rate reduction, coupled with earlier income tax cuts, should substantially enhance private sector consumption, thereby supporting capital expenditure during these globally uncertain times, it added.
Favorable global prices for crude oil and fertilizers have positively impacted India concerning inflation, fiscal deficits, and corporate margins for FY25, the report indicated.
Nonetheless, the fund cautioned that reciprocal tariffs initiated by the US administration might adversely affect both US and global growth forecasts.
The easing of policy rates by the US Federal Reserve provides the Reserve Bank of India with the flexibility to further reduce policy rates, thereby bolstering domestic growth amid external challenges,” it noted.
Point of View
I believe the resilience of Indian equities amidst global uncertainties showcases the strength of our domestic economy. The proactive measures taken by the government and the private sector are crucial in navigating these challenges, ensuring that India remains a key player on the global economic stage.
NationPress
17/12/2025
Frequently Asked Questions
What factors are driving the growth of Indian equities?
The growth of Indian equities is driven by domestic growth catalysts, policy support, a favorable interest rate environment, and increasing private investments, particularly in infrastructure and renewable energy.
How do global uncertainties affect Indian equities?
Global uncertainties can create headwinds for private capital expenditure and overall market sentiment. However, India's robust domestic fundamentals help mitigate these risks.
What role does the government play in supporting equities?
The government plays a crucial role through supportive policies, infrastructure investments, and tax reforms that enhance private sector consumption and investment.
