Investors think that Indian stocks will lose more money again because of slow economic growth and high prices affecting company profits and foreign money coming in. About 22 experts who were surveyed believe that the main stock index, the NSE Nifty 50, will drop by at least 5% in the next three months until March. Concerns about global issues, especially during Donald Trump’s second term, are adding to the troubles for Indian stocks.
After reaching several record highs last year, India’s nearly $5 trillion stock market has faced challenges due to foreign investors pulling out their money as they worry about lower spending by consumers. The total market value of companies in the MSCI India Index has fallen by $556 billion after the index dropped over 13% from its peak in September.
Mohit Khanna, a fund manager at Purnartha Investment Advisers, says, “Indian markets are facing a lot of uncertainty. This negativity comes from both local and worldwide events happening in 2024 that will affect our stocks in the short term.”
There’s more worry about India’s growth plans because recent government data shows the economy will grow by 6.4% this year, which is much lower than the 8% average of the last three years. Vehicle sales went down in December, and companies selling consumer products report tough times ahead.
Last week, strategists from HSBC, including Herald van Der Linde, changed their view on Indian stocks to neutral. They say investors will rethink their decisions after lowering the expected growth of earnings for the Nifty 50 index for the next year from 15% to just 5%.
While many believe that the benchmark may not do well over the year, about one-third think the Nifty 50 could increase by 10% to 15% in 2025 because of strong investment from local investors. The Nifty 50 index dropped 8.4% last quarter but still managed to rise by 8.8% throughout 2024, marking its ninth straight year of gains.
Vikas Gupta, chief investment strategist at OmniScience Capital, argues, “If we look beyond the short term, we are on the brink of an economic boom. Cuts in interest rates will guide the overall direction of the Indian stock market.”
The survey responses show that health-care and technology stocks are expected to do well this year, thanks to the weak rupee. However, none of the 22 experts felt optimistic about real estate after it grew more than 110% in the last two years. Dong Chen, chief Asia strategist at Pictet Wealth Management, mentioned at a briefing, “We’re waiting for a chance to buy more when company earnings start to grow again.” He didn’t take part in the survey but kept his view on India neutral.
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