India’s overall growth prospects remain positive.
Despite global economic challenges, India’s economic growth remains strong. Going forward, the growth rate is expected to accelerate further due to domestic reasons. This has been said in a report of HSBC Mutual Fund. According to the report, interest rates and cash flow, fall in crude oil prices and normal monsoon, all these can prove to be helpful in reviving economic growth.
The report said that even though global uncertainties remain, India’s overall growth prospects remain positive. Uncertainties related to global trade currently remain a challenge for private capital investment.
Improvement is taking place in these sectors
However, the report expects India’s investment cycle to remain on an upward trend in the medium term. This is likely to be supported by continued government investment in infrastructure and manufacturing, gradual increase in private investment and improvement in the real estate sector. The report further said that private investment in renewable energy and its related supply chain is expected to increase. Along with this, indigenous manufacturing of high-end technology components and India becoming an important part of the global supply chain can also support rapid growth in the medium term.
Positive expectations from stock market
The report on stock market outlook says that the valuation of Nifty is slightly above the 10 year average. Despite this, the report’s outlook on the Indian stock market remains positive due to strong growth prospects in the medium term. Referring to the challenges, the report said that weak global economic growth may put pressure on demand in the future. Global policy uncertainty, such as the threat of tariffs, protectionist policies of some countries, and ongoing geopolitical conflicts, may act as deterrents to private investment. Apart from this, a sharp decline in government capital expenditure is also said to be a major risk.
Investment will increase in private sector
Along with this, the report has also identified many positive aspects for the Indian market. It said that there is a possibility of improvement in private capital investment, because according to the RBI survey, the level of capacity utilization in industries is quite good, which indicates increase in private investment. Also, the continuous expansion of the Production Linked Incentive (PLI) scheme is expected to further promote private investment in the targeted sectors. Increasing private capital investment in renewable energy sector will also be positive for the economy.