By Dr. Vikas Gupta, CEO and Chief Investment Strategist, OmniScience Capital
“Food prices, which had been impacted by an irregular monsoon, are now subsiding, reducing their pressure on the Consumer Price Index (CPI). Current CPI levels are within the RBI’s target zone, and the trend suggests further moderation in the coming months. A particularly noteworthy data point is the relatively low housing inflation, which stands at less than 3%. Although housing has a modest 10% weightage in the CPI, it remains a significant cost for a large segment of the urban population. The recent uptick in the Index of Industrial Production (IIP) to 3.5% is an encouraging sign of economic growth.
On the global front, U.S. inflation, though moving in an unfavorable direction, remains within manageable limits. This increases the likelihood of a rate cut by the Federal Reserve in its December meeting. Such a move, combined with improving domestic inflation dynamics, sets the stage for the RBI to consider initiating rate cuts in its upcoming meeting. These developments would provide a supportive environment for accelerating economic growth in India”
Where should investors focus on?
Investors are encouraged to adopt diversified portfolios that focus on emerging growth themes aligned with India’s medium- to long-term growth potential. The RBI’s emphasis on liquidity and stability offers a conducive environment for strategic investments.
The ongoing market volatility is not a setback but a chance to reposition portfolios for the next growth cycle. By prioritizing resilience, strong fundamentals, and diversification, investors can capitalize on India’s robust economic trajectory for sustained returns.
India’s economy is on a multi-year high-growth trajectory, driven by ambitious infrastructure development, strategic growth investments, and favorable geo-strategic dynamics. Markets have already signaled a recovery, and the upcoming Union Budget is expected to reinforce this momentum.
We anticipate double-digit earnings growth in 2025, bolstered by expected interest rate cuts by both the Fed and the RBI, which could further stimulate economic expansion.
India’s favorable macroeconomic trends and prudent policy adjustments are laying the groundwork for a strong recovery, offering both stability and growth opportunities for the economy and markets. Patience, discipline, and strategic allocation will be critical for investors to maximize these opportunities and achieve long-term success.