Stocks ‘bottomed out’. What awaits in 2025

This report is from this week’s CNBC Inside India newsletter, bringing you timely, in-depth news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. As you see? You can subscribe here.

The stock market in India has not had the best start to this year. Fears of overvaluation coupled with cut earnings expectations led to a steady decline. Beautiful 50.

The index has now re-entered correction territory – down 10% – since its peak in late September.

In fact, the benchmark to date is now red. But this is not unusual for investors. By my count, the Nifty 50 has been negative by the fifth trading day of the year in seven of the last 10 years.

But this time is different. Many analysts entered the new year raising concerns about high valuations and slowing earnings growth at companies.

This is a far cry from the bullish sentiment of the Indian stock market over the previous year. S&P 500increased by more than 20% for the second year in a row.

Equity strategists at HSBC believe the bearish sentiment will continue in the markets.

“As earnings disappointed – consensus cut growth estimates for the NIFTY 50 to 5% from 15% – investors will reassess their positions, capping market returns,” the bank’s Asia Pacific strategists, led by Herald van, said. der Linde in a note to clients on Thursday. The investment bank downgraded Indian stocks to neutral.

Morgan Stanley noted that stocks outperformed bonds and gold last year for the first time in eight years (which, to be fair, outperformed most global markets).

“In the long term, we believe that equities will lead the way in financial assets and gold will shine among physical assets,” said Ridham Desai of the investment bank.

Many also believe that Indian stocks are now ripe for the picking after a long slide.

“India has bottomed,” Bernstein strategist Venugopal Garre said in a note to clients last week. Garret expects economic growth to pick up over the next three to six months and urges investors to get ahead of the turnaround. “Investment is proposed before recovery,” he said. Bernstein expects the Nifty 50 to end the year at 26,500, up 13% from current levels.

Morgan Stanley said the central government could reduce the fiscal deficit when it announces its budget in February, which could lower bond yields and lower borrowing costs for companies.

That sentiment is echoed by Citi’s equity strategists. They expect India’s economy to expand by 6.5% this year, driven by increased government spending on infrastructure that struggled last year.

“We have a constructive view on equity returns given more reasonable market valuations,” Citi’s Surendra Goyal said in a note to clients. The investment bank also expects the Nifty to end the year at 26,000 – up 10.5%.

Indian authorities expect its economy to grow by 6.4% in the 2024-2025 fiscal year. India’s National Statistics Office presented its first preliminary forecast on Tuesday Lowest since 2020 When India’s gross domestic product fell by 5.8% due to the pandemic. This estimate is lower than the Reserve Bank of India’s forecast of 6.6% for the current fiscal year. Here are the economists at HSBC and HDFC Bank think about it.

India wants the country’s overseas missions to help boost exports. The Ministry of Commerce of India has asked the Indian Missions increase market intelligence efforts and identify export opportunities, government sources told CNBC-TV18. Trade heads from India’s missions in 20 key countries will come together for a three-day meeting organized by the ministry that will focus on growing exports.

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The bearish trend has begun with Indian stocks. The Beautiful 50 the index closed around 23,500 points, down 1.8% since last week.

The benchmark 10-year Indian government bond yield has been flat so far this year, hovering around 6.76%.

On CNBC TV this week, Abhiram Eleswarapu, head of India equities at BNP Paribas, believes that Indian markets are currently going through a “soft phase” as valuations are high. But this “shallow correction” may end and the markets can return high odd numbers From March to the end of the year, Eleswarapu said.

Meanwhile, Pulkit Patn, India industry analyst at Goldman Sachs, noted that the bank is waiting India’s cement industry is set to expand in the second half of the year, indicating “a rebound in infrastructure spending”. Government spending, real estate and rural spending will form the bulk of such investments and consequently relatively strong demand for infrastructure and related materials.