Nomura: Strong Macroeconomic Outlook For India In 2nd Half Of FY25

Driven by steady growth and low underlying inflation, India’s macroeconomic fundamentals are expect to remain robust in the second half of FY25, according to global brokerage firm Nomura.

Nomura projects a decline in India’s consumer price index from 5.7% at the end of FY24 to 4.8% in the first quarter of FY25, highlighting the country’s low underlying inflation as a standout amid global “sticky inflation.”

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Food inflation is expecte to moderate due to the shift to La Niña, ample rice stocks, and increase pulse production, as per the brokerage firm’s analysis.

In a note, Nomura analysts also anticipate a continued focus on capital expenditure and fiscal consolidation in the upcoming Union Budget.

The brokerage is optimistic about domestic sectors such as manufacturing and investment themes over consumption.

Nomura mentione in an earlier note that the Union Budget is likely to outline the policy direction, which expect to remain largely unchange.

“The government is likely to pursue fiscal consolidation and prioritize investments/capital expenditure,” the brokerage firm stated.

Nomura believes that reforms in India have withstood political challenges and expects the government to continue its pace of governance and administrative reforms, leaving states to address more complex reforms around land and labor.

India’s economic fundamentals remain strong, with encouraging growth prospects, inflation dynamics, current account status, and fiscal progress, according to reports.