Do it yourself

The Indian economy has indubitably shown brilliant resilience and sustained the base growth rate of ~6%. In the current year FY26 also the real GDP is expected to grow in the range of 6.3% to 6.6% (vs 6.5% in FY25). It is expected that the tax incentive offered in the budget for FY26 may support urban consumption demand, that has been lagging for the past couple of years, while the rural demand has shown some pick-up. Good monsoon may further stimulate rural demand. Benign inflation and below potential growth trajectory shall keep the RBI on the monetary easing path. Rates may fall further and liquidity may remain supportive. Continued focus on capacity building by the government may however continue to remain the mainstay of the growth. The global environment remains challenging with trade related uncertainties and geopolitical tensions persisting. However, a resolution of trade and geopolitical conflicts could provide strong impetus. In my view, 6% (+/- 50bps) may now be the ba...

Resilient growth despite disturbance and challenges The full year FY25 growth (6.5% vs 9.2% in FY24) came in line with the second advance estimates of NSO; 4QFY25 growth rate (7.4% on a high base of 8.4% in 4QFY24) is much better than the estimates of the market professionals, though in line with NSO advance estimates. The higher Q4 growth is mostly attributable to— (i)     High gross investment (GCFC) led by the construction sector (4QFY25 10.8%), reflecting strong government capex. Investment (Gross Fixed Capital Formation or GFCF) grew 9.4% yoy in 4QFY25, marginally above the long-term average. However, the higher public capex seen in 4QFY25 could be due to slow 1HFY25, as government functioning was impacted by the model code of conduct implemented during the general; elections. (ii)    Farm sector growth of 5.4% in 4QFY25 (on a low base of 0.9% in 4QFY24). On a full year basis (FY25) also, the sector was up 4.6%, compared to 2.7% in FY24. If we c...

The National Statistical Office (NSO) released provisional estimates (PE) of the annual growth statistics for the Indian economy, last Friday. The data indicates that the Indian economy grew at a rate of 7.4% (real GDP) in 4QFY25 and at a rate of 6.5% for the full year FY25. The key highlights of the growth data could be listed as follows: FY25 Growth Real GDP:  Estimated at  ₹ 187.97 lakh crore at constant (2011-12) prices. Growth rate:  6.5% compared to  ₹ 176.51 lakh crore in FY 2023-24 (8.2% growth in FY24). Nominal GDP:  Estimated at  ₹ 330.68 lakh crore. Growth rate:  9.8% compared to  ₹ 301.23 lakh crore in FY 2023-24. Real Gross Value Added (GVA):  Estimated at  ₹ 171.87 lakh crore at constant prices. Growth rate:  6.4% compared to 7.2% in FY 2023-24. Nominal GVA:  Growth rate: 9.5% compared to 8.5% in FY 2023-24. Quarterly GDP Estimates for Q4 FY 2024-25 (January-March 2025) Real GDP:  Estimated at  ₹ 51.35 l...

Financial Year 2024-25 (FY25), may be recorded in the annals of history as a watershed year for global politics, geopolitics, markets and the financial system. The events that occurred during the past twelve months have opened up significant possibilities for emergence of a new global order. Although the contours of the likely new global order are yet to begin taking a shape, it appears that fight for dominance over technology; endeavor to gain fiscal strength; interventionist democracy where the state exercises intensive control over citizens; and top priority to energy security would be four key characteristics of the new order. The markets began to take cognizance of the broader developments and oscillated wildly between the extremes of greed and fear during the year. However, thankfully, markets managed to close the year on a rather satisfactory note. Most asset classes – equity, bonds, precious metals, base metals and real estate yielded decent returns for the year. Moreover, as...

In the past seven trading sessions, the benchmark Nifty 50 has managed to fully recoup the YTD2025 losses, soothing the ruffled feathers to a large extent. The broader markets have also regained some of the lost ground, though the midcap (-10% YTD2025) and small cap (-15% YTD2025) indices are still in the negative territory. For the financial year 2024-2025, Nifty (+6.5%) has yielded a decent return, which is marginally lower than China (+12%), the US (+10%) and Europe (+9%), but much better than the other Asian peers like Indonesia (-11%), Japan (-6%) and South Korea (-5%). Broader markets in India are also positive FY25 (Midcap +8% and Smallcap +5%). Now the question is “how does the market look from here?”. I shall deal with this question in some detail next week. However, to close this financial year, I must say this. In my view, the collective wisdom of the market in India has appeared to have assimilated all the known events and anticipated developments regarding the economy and ...

  The Reserve Bank of India (RBI) recently released the results of forward-looking surveys. Based on the feedback received from the respondents the survey results provide important insights with respect to consumer confidence, inflationary expectations and economic growth expectations. Consumer confidence The survey collects current perceptions (vis-à-vis a year ago) and one year ahead expectations of households on general economic situation, employment scenario, overall price situation, own income and spending across 19 major cities. As per the survey results, Consumer confidence for the current period paused on its uptrend as sentiments on all parameters, except spending. The current situation index (CSI)2 moderated to 97.1 in May 2024 from 98.5 two months ago. (A value below indicates a state of pessimism) However, for the year ahead, consumer confidence remained at elevated level in the optimistic terrain though it declined, albeit marginally, due to relatively tempere...

In my view, the stock market outlook in India, in the short term of one year, is a function of the following seven factors: (1)   Macroeconomic environment (2)   Global markets and flows (3)   Technical positioning (4)   Corporate earnings and valuations (5)   Return profile and prospects for alternative assets like gold, real estate, fixed income, and cryptocurrencies, etc. (6)   Greed and fear equilibrium (7)   Perception of the political establishment The outlook for these seven factors for the next twelve months is as follows, in my view— Macroeconomic environment – Neutral My outlook for the likely macroeconomic environment in FY25 is as follows: (a)   Inflation: Consumer inflation may average well within the RBI tolerance band of 4% to 6%. However, food inflation may continue to be erratic and cause occasional violations of the upper range. (b)   Fiscal Deficit: The fi...