Worst Seems To Be Over For Indian Markets; GDP Growth To Rebound: Goldman Sachs

A Goldman Sachs report has indicated that India’s economic downturn has likely bottomed out. The global brokerage stated that economic growth and earnings are stabilizing, but market volatility may persist due to global uncertainties, including US tariffs.

GDP Growth On Recovery Path

India’s GDP grew by 6.4% year-on-year in Q4 2024, supported by private consumption. Goldman Sachs economists predict growth will range between 6.6% and 7% in the next four quarters, with 2025 GDP growth projected at 6.4%. Rural activity showed strong momentum in January, signaling a steady recovery.

The report also highlighted that the 40-basis-point fiscal consolidation in the budget suggests the worst impact of fiscal tightening is over. However, the government remains committed to fiscal discipline.

Earnings Stabilization And Valuation Concerns

Goldman Sachs expects corporate earnings to stabilize in the next few quarters. However, small and midcap stocks remain overvalued, posing risks for investors.

An HSBC report last week echoed optimism, stating that India’s long-term outlook remains strong. The investment cycle is on an uptrend, driven by government spending on infrastructure and manufacturing, increased private investment, and a real estate recovery.

HSBC also projected higher investments in renewable energy, localization of advanced technology components, and deeper integration into global supply chains as key growth drivers.

For FY25, GDP growth has reached 6.2% year-on-year. Central government capital expenditure is expected to grow 7% in FY25 and 10% in FY26. Meanwhile, the RBI is moving toward easing policy rates to support growth.

Both reports suggest India’s economic recovery is on track, with strong long-term potential despite global headwinds.

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