India's GDP Growth Projected to Strengthen in the Year’s Second Half Amidst Stabilizing Markets
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Synopsis
India's GDP growth is projected to strengthen in the year's second half due to macroeconomic stability and significant foreign exchange reserves, as per a recent report from Motilal Oswal Private Wealth (MOPW). Market volatility is expected to decline later in the year.
Key Takeaways
- India’s GDP growth is expected to improve in the second half of the year.
- Macroeconomic stability is supported by foreign exchange reserves and regulated twin deficits.
- Market volatility anticipated in early 2025 due to global factors.
- Medium-term outlook for equities remains positive.
- Close monitoring of earnings and GDP growth is recommended.
Mumbai, Jan 15 (NationPress) India’s GDP growth is anticipated to strengthen in the second half of this year, driven by macroeconomic stability, bolstered by substantial foreign exchange reserves and a well-regulated twin deficit, as highlighted in a report by Motilal Oswal Private Wealth (MOPW) released on Wednesday.
The report indicates that India is likely to remain among the fastest-growing major economies, even amidst a recent slowdown in growth.
Indian markets are predicted to experience volatility in the first half of 2025 due to various global and domestic factors, including the policies of the new Donald Trump administration in the US, China’s strategies to mitigate trade tariffs, and the potential effects on emerging market (EM) currencies, along with the impending Union budget.
These circumstances are expected to generate uncertainty in the short term. However, as these developments unfold and clarity begins to emerge, market volatility is projected to diminish in the latter half of the year, the report emphasized.
“The post-COVID period has been highly beneficial for equity investors, fueled by earnings growth, enhancing macros, and domestic inflows into equities,” stated Ashish Shanker, MD and CEO of MOPW.
The year 2024 has mirrored this trend, with broader markets performing exceptionally well. The mid-cap and small-cap segments have outshone the large caps, while gold has also performed well as an asset class.
“The year 2025 is expected to introduce its share of uncertainty with the swearing-in of the new US president. Following a period of robust performance, the US markets appear to be fatigued. This necessitates a moderation in expectations and a keen focus on risk management through asset allocation,” added Shanker.
MOPW advocates for close observation of the upcoming earnings season and the GDP growth trajectory.
“We anticipate a reversal of this trend, expecting large caps to outperform this year due to favorable valuations. In the long run, earnings growth and stock returns should align,” it suggested.
Despite the likelihood of short-term volatility, the medium-term outlook for Indian equities remains optimistic. This positive sentiment is underpinned by various factors, including India’s stable macroeconomic framework, a probable increase in government expenditure in the medium term, and improving liquidity conditions coupled with monetary stimulus from the RBI.
