HSBC MF: India's Growth Resilient Despite Global Headwinds, Rates Favourable

The report stated that the interest rate and liquidity cycle in the country remain supportive of a pick-up in growth going forward.

It also added that India's investment cycle is expected to remain on a medium-term uptrend, supported by government spending on infrastructure, policy support for manufacturing and a pickup in private investments.

It stated "We believe India's growth remains quite resilient despite the global macro-economic challenges. Interest rate and liquidity cycle are supportive of a pick-up in growth going forward".

According to the report, private investments are expected to rise in sectors such as renewable energy and related supply chains. It also noted that localisation of higher-end technology components and India becoming a more meaningful part of global supply chains could support faster economic growth.

The report highlighted that valuations in the Nifty 50 are currently modestly above the 10-year average. However, it said the overall outlook for Indian equities remains constructive, supported by a stronger medium-term growth outlook.

The report also pointed out that the recent conflict in the Middle East could add significant macro-economic uncertainty if it is not resolved quickly.

It noted that recent announcements regarding potential trade deals with the European Union and the United States could support private capital expenditure. According to the report, improved medium-term tariff certainty and stronger export competitiveness could further encourage investments.

The report further highlighted that policy measures by the government and the central bank are expected to support economic activity.

It said that interest rate cuts by the Reserve Bank of India, along with the GST rate cut and income tax rate cut announced by the Union government, could significantly boost private sector consumption.

These measures are also expected to support private capital expenditure in the coming period.

The report added that in the 2026 Budget, the government has maintained its commitment towards higher infrastructure spending, which is likely to provide additional support to economic growth and investment activity.

Overall, the report maintained a positive outlook on India's growth trajectory, supported by strong domestic demand, supportive policy measures and an improving investment cycle.

- ANI