Citigroup Inc. is anticipating a 10th consecutive year of gains for India’s $5 trillion stock market, driven by a recovery in economic growth and robust corporate earnings.
The brokerage has set a target of 26,000 for the benchmark NSE Nifty 50 index, which suggests a 10% return from its close on December 31. The index ended 2024 about 5% above Citigroup’s previous forecast of 22,500.
In a recent note, Citigroup’s strategists, including Surendra Goyal, highlighted that India’s earnings per share (EPS) growth outlook remains robust. They added that the risk level is relatively low due to the diversified nature of the listed companies. Goyal also noted that with some policy support, India’s economy could return to a growth trajectory of approximately 6.5% in 2025. However, he cautioned that a strong private investment recovery may still be elusive.
The optimistic outlook by Citigroup for India’s stock market is in line with predictions from other global brokerages. Morgan Stanley has also forecasted double-digit returns for India, predicting an 18% rise for India’s other key benchmark, the BSE Sensex, in 2025. According to Morgan Stanley, retail buying will continue to outpace the supply of new shares, supporting the market’s growth.
In 2024, individual investors made significant contributions to India’s stock market, buying a record 1.5 trillion rupees worth of stocks on the National Stock Exchange of India Ltd. This surge in retail investment is expected to continue, with market participants anticipating that robust domestic flows will act as a buffer against challenges such as weak urban demand, a depreciating currency, and rising global yields.
Despite global challenges, domestic flows into the Indian stock market have remained resilient. Retail investors have consistently “bought the dips,” according to Citigroup’s Goyal. He also pointed out that while inflows from global funds may be affected by the strengthening of the U.S. dollar, domestic investment remains strong, supporting the market’s overall growth prospects.
With its steady economic recovery, robust corporate earnings, and continued retail investment, India’s stock market is poised to continue its growth trajectory in 2025, maintaining momentum for the 10th consecutive year.
Also Read: Private Equity Investments In India Surge To $15 Billion In 2024
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