New Delhi, Dec 31 After a resilient performance in 2024 amid geo-political headwinds, the Indian economy is poised to be supported by a stable political scenario, favourable policy environments, the effects of production-linked incentive (PLI) programmes, possibilities brought about by changes in the global supply chain and government emphasis on infrastructure spending.
The Central government is focused on growth through direct investments in the budget as well as through reforms like GST (increasing tax to GDP), lower corporate tax and ease of doing business (attracting private capex), and private capital through incentives for import substitution or export ecosystem creation.
A Canara Robeco Mutual Fund’s report “Unfolding Perspectives” on Tuesday said that for 2025, corporate and bank balance sheets are in the best possible shape to drive capex and credit respectively, as consumer spending remains resilient.
“We anticipate easing of the lag effect caused by the rise in global commodity prices, both for food and non-food items,” according to the report.
Domestic institutional investment (DII) flows are as meaningful as FPI flows, with retail flows increasingly being directed in markets through insurance, EPFO and MFs.
“Current monthly SIP book of MFs in India is Rs 25,300 crore which should provide good support to the markets, in case we witness continued foreign institutional investment (FII) withdrawals,” the report mentioned.
The Indian macro remains strong among large markets except for the growth part. The Current Account Deficit (CAD) has improved significantly and is expected to be 1 per cent for FY25.
Robust services exports and healthy remittances flow should help keep the country’s CAD in the safe zone during the current financial year (FY 2024-25), according to a Crisil report.
“We expect CAD at about 1.0 per cent of GDP in fiscal 2024-25, as against 0.7 per cent last year. In addition, the impact of geopolitical issues will remain monitorable,” the report stated.
Most domestic macro and micro indicators remain steady. Given these aspects, the domestic equity market remains focused on earnings, according to industry experts.
Government spending has resumed, employment is on the rise, and supply bottlenecks are lessening.
According to industry watchers, the domestic stock market in 2025 is set to ride on strong economic growth and government efforts to boost infrastructure and digital innovation.
“Sectors like capital goods, technology, financial services, consumption, and healthcare are expected to shine, with emerging areas such as semiconductors, electronic and manufacturing, renewable energy and electric mobility grabbing more attention,” said Deepak Ramaraju, Senior Fund Manager, Shriram AMC.
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