Indian equities remain constructive on private capex, trade prospects: Report
New Delhi, July 17
The view on Indian equities remains constructive as resilient domestic growth, improving private capex prospects, and potential trade deals with the EU and US act as medium-term tailwinds, a report said on Friday.
India's growth and investment cycle should support equities as oil and fertiliser prices ease, policy cuts bolster demand and private capex prospects improve, the report from HSBC Mutual Fund said.
The thaw in the Middle East conflict and a correction in crude and fertiliser prices to pre‑conflict levels are major macro positives that should support growth in H2FY27, the report said.
"We believe the government should be able to boost infra spending in H2FY27 although the full year may be flattish given the impact of the conflict on government finances," the fund house said.
The report forecasted that India's growth should remain robust in FY27, supported by the interest rate cuts by RBI, the GST rate cut, and income tax rate cut announced by the Union government in FY26.
These factors should support consumption and private sector capex, it said, adding that the risk of a below normal monsoon with negative consequences for food production and leading to higher food inflation is also another stress in the near term.
India's investment cycle is likely to be on a medium-term uptrend supported by government investment in infrastructure, support to manufacturing and pickup in private investments.
Announcements of potential trade deals with the EU and US should help support private capex driven by improved medium term tariff certainty and export competitiveness.
In June, BSE Sensex and NSE Nifty were up 2.6 per cent and 1.7 per cent, respectively, while broader market indices such as NSE Midcap index edged up 1 per cent and BSE Smallcap index surged 5.4 per cent.
Banks were the best performing sectors in June, followed by realty and healthcare. Autos and capital goods also delivered positive returns.
— IANS
Reader Comments
Finally, some positive signals for the economy! The trade deals with EU and US could be a game-changer for our manufacturing sector. But I hope the benefits reach the common man too, not just big corporations. 😊
The report is right about private capex improving, but I think we need to be realistic. Small and medium businesses are still struggling with high borrowing costs despite RBI rate cuts. Let's see if the infrastructure spending actually picks up in H2FY27 as predicted.
As someone working in the financial sector, this is encouraging for overseas investors. India's growth story remains strong relative to other emerging markets. The trade deals should boost export competitiveness – something we've been lacking for too long.
I'm happy about the GST and income tax cuts, but will the average household see any real benefit? My salary hasn't increased much, and everything from vegetables to rent is going up. Equity markets might look good, but ground reality is different for many of us. 🤔
Good analysis overall. The easing of Middle East tensions and lower crude prices are indeed positives. But I worry about the monsoon risk mentioned – if food inflation spikes, all these macro gains could be wiped out. Need to keep a close watch on the weather forecast.
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