Mumbai, India’s long-term structural growth story remains intact thanks to favorable demographics and stable governance, and Indian equities are likely to remain positive next year, a report showed on Tuesday.
According to a note from ITI Mutual Fund, private banks, capital goods and digital trading are expected to see strong earnings growth by 2025.
In 2024, the major indices – Nifty 50 and Sensex – generated positive returns of 14.32 percent and 12.55 percent, respectively.
While indices related to different market capitalizations – large, mid and small, represented by Nifty 100, Nifty Mid Cap 150 and Nifty Small Cap 250, on an absolute basis rose by 17.80 per cent, 27.60 per cent and 30.71 per cent respectively. (as on December 13).
“Indian equities are expected to perform strongly in the coming year. We believe that sectors such as private banking, IT, digital commerce, capital goods and pharmaceuticals, etc. may have a clearer path to stronger earnings and are expected to perform well,” said Rajesh Bhatia, Chief Investment Officer, ITI AMC.
The Indian economy has shown positive indicators including a rise in Goods and Services Tax (GST) and favorable sowing rates for Kharif crops.
Rural demand has strengthened, with the Purchasing Managers’ Index (PMI) and exports showing positive momentum, the note highlights.
India is in the midst of a significant multi-year capital expenditure (capex) cycle, which is expected to provide a strong foundation for future economic growth.
Private sector investments are expected to reach a ten-year high of Rs 55,122 billion, indicating a broad-based growth phase that could accelerate in the coming years, the note said.
India’s financial services sector is showing promising resilience, with a narrowing gap between bank loan growth and deposit growth, expected to ease margin pressure.
The banking sector in particular has delivered strong returns and improved capital adequacy levels, reducing the need for new capital injections.
Valuations of private sector banks are reasonable compared to the broader market, indicating stability and long-term potential, the note said.
–IANS
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