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India's Growth Cycle Gains Momentum, Improving Market Risk-Reward

A report from Bajaj Finserv AMC states that the risk-reward balance in Indian markets has improved due to strong domestic growth traction and supportive policy changes. The firm favors long-tenor government securities, though yields may remain range-bound in the short term due to supply. Recent trade agreements, the Union Budget, and RBI policy are positioning India for a stronger growth cycle led by manufacturing and investment. While equity markets began 2026 with volatility, sentiment improved following key developments like the India-US trade announcements.

Key Points: India's Growth Cycle Improves Market Risk-Reward: Report

  • Long-tenor G-secs look attractive
  • Domestic growth traction is strong
  • Policy changes and trade deals are supportive
  • Manufacturing and investment lead the cycle
2 min read

Stronger risk-reward balance in markets as India's growth cycle gains momentum: Report

Bajaj Finserv AMC report says India's domestic growth and policy shifts create a better risk-reward balance for investors, favoring long-tenor bonds.

"the risk-reward balance appearing meaningfully better - Bajaj Finserv AMC Report"

New Delhi, March 4

Longer‑tenor government securities are looking attractive with much of the "uncertainty already priced in," and the risk-reward balance in Indian markets is better due to strong domestic growth, a report said on Wednesday.

The report from Bajaj Finserv AMC said domestic growth traction, supportive policy changes and improved global exposure through trade agreements have led to "the risk-reward balance appearing meaningfully better."

Though the asset management firm favored long tenor G-secs it said that yields may remain range‑bound in the short term given huge supply.

Regarding the recent progress on trade deals, the firm said that India's structural cost advantage in manufacturing should limit the impact of opening sectors to US imports, to select pockets such as premium cars and high-end alcohol, rather than the broader industrial ecosystem.

Sorbh Gupta, Head‑Equity, Bajaj Finserv AMC, said recent trade agreements, the Union Budget and RBI policy all point to India positioning itself for a stronger domestic growth cycle led by manufacturing and investment, the report further said.

"RBI guided for a slightly firmer inflation trajectory, raising its FY26 estimate to 2.1 per cent from 2 per cent, alongside higher expectations for the first half of FY27 as well. This is consistent with an economy emerging from a very low-inflation phase and now experiencing a cyclical growth recovery," said Siddharth Chaudhary, Head-Fixed Income, Bajaj Finserv AMC.

Indian equity markets have begun 2026 on a volatile note, echoing the sharp correction and risk aversion seen in early 2025, though this time against a relatively stronger domestic macro backdrop, the report noted.

"However, sentiment improved meaningfully following the back-to-back developments, particularly the India-US trade announcements," it said.

As consumption momentum improves and capacity utilisation rates rise, further momentum in investments going into FY27 could be expected, with higher growth performance already being seen in manufacturing, financial, real estate and professional services and hospitality sectors, a recent report has said.

- IANS

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Reader Comments

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Priya S
Finally some positive outlook! The volatility had me worried about my SIPs. It's good to hear experts believe the risk-reward is better now. Hoping this momentum in real estate and hospitality translates to more opportunities on the ground. 🤞
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Sarah B
Interesting read. As an NRI looking to invest back home, the analysis on long-tenor G-secs is useful. The domestic growth story seems robust, but the note about inflation inching up is something to watch closely. The trade deal details are reassuring for the broader market.
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Rohit P
Accha hai! Growth cycle gaining momentum is music to my ears. But reports like this often sound overly optimistic. Let's see if this investment in manufacturing actually creates stable jobs for the middle class, or just remains numbers on a sheet. A bit of healthy skepticism never hurts.
K
Karthik V
The key takeaway is the "structural cost advantage". If we can leverage that while opening up selectively, it's a win-win. Hope the policymakers keep the focus sharp. The equity market volatility is a buying opportunity for those with a 5+ year horizon, I feel.
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Michael C
A balanced and detailed report. The point about inflation trajectory is crucial. A slight rise from such a low base is manageable and indeed a sign of a heating economy. Good to see professional services and hospitality getting a mention—often overlooked sectors.

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