Indian equities are anticipated to stay resilient to international macroeconomic challenges reminiscent of a stronger US greenback, shallower easing in rising markets, and potential US tariff hikes on China, in line with Goldman Sachs’ newest report. Regardless of this exterior immunity, home financial progress has been cyclically slowing.
Goldman Sachs initiatives India’s GDP progress to decelerate to six.3% year-on-year (YoY) in 2025, citing fiscal constraints and subdued credit score progress. This slowdown is anticipated to weigh on company earnings, with consensus EPS estimates prone to be revised downward.
Inventory Market Outlook
Goldman Sachs expects the India inventory market to stay range-bound within the brief time period because of weak earnings and excessive valuations.
It forecasts MSCI India to ship earnings progress of 12%, 13% and 16% in CY 2024, 2025 and 2026, respectively, barely under consensus expectations. Whereas the valuations have corrected 8% after the latest pullback, the ahead price-to-earnings (PE) ratio for MSCI India stays elevated at 23x, considerably above its 10-year imply, and above Goldman Sachs’ ‘truthful worth’ estimate of 21x, suggesting additional de-rating threat.
The worldwide funding financial institution estimates a muted 3-month return for the Nifty 50 at 24,000, however expects a restoration to 27,000 over the subsequent 12 months, pushed by underlying earnings progress.
Tactical Allocation
The agency maintains a impartial stance on Indian equities inside its Asia/EM 2025 allocations however has adjusted its sector preferences. It stays chubby (OW) on home sectors with robust earnings visibility, reminiscent of autos, telecom, insurance coverage, actual property, and web. Moreover, Goldman has upgraded exporters like IT and prescription drugs, citing secure demand, weaker rupee benefits, and defensive traits.
High quality and Alpha Themes in Focus
Goldman Sachs highlights “high quality progress” as a key technique amid the cyclical slowdown. It emphasizes shares with robust steadiness sheets, excessive earnings visibility, constructive EPS revisions, and low beta. Its medium-term funding themes embody housing, agriculture, protection, tourism, and prosperous shopper segments.
Disclaimer: The views and suggestions made above are these of particular person analysts or broking firms, and never of Mint. We advise buyers to examine with licensed consultants earlier than making any funding selections.
