Stocks have bottomed. Here's what 2025 holds

This report is taken from CNBC's 'Inside India' newsletter this week that brings you insightful and timely news and market commentary on the emerging powerhouse and the big companies behind their meteoric rise. Like what you see? You can subscribe here.

The stock market in India has not had the best start to the year. Fears of high valuation multiples combined with low earnings expectations have led to a steady decline in the value of the stock Classy 50's.

The index is now back in correction territory – down 10% – since its high in late September.

In fact, year-to-date, the indicator is now red. However, this is not out of the ordinary for investors. By my estimates, the Nifty 50 index has gone negative on the fifth trading day of the year in seven of the last 10 years.

It is a far cry from the bullish sentiment of last year that the Indian stock market would outperform the market Standard & Poor's 500Which rose by more than 20% for the second year in a row.

Equity strategists at HSBC believe the gloomy mood gripping the markets is likely to persist.

“As earnings are disappointing – the consensus (FY25) cut growth estimates for the NIFTY 50 from 15% to 5% – investors are likely to reevaluate their positions, limiting Market returns. der Linde in a note to clients on Thursday. The investment bank downgraded Indian stocks to neutral.

Morgan Stanley noted that stocks last year, for the first time in eight years, performed worse than bonds and gold (which, to be fair, outperformed most global markets).

However, many, including the Wall Street bank, believe that Indian stocks, after their long decline, are now ripe for the picking.

“India has hit bottom,” Venugopal Jari, a strategist at Bernstein, wrote in a note to clients last week. Gary expects economic growth to rebound over the next three to six months and urges investors to anticipate this shift. He added: “It is suggested to invest before recovery.” Bernstein expects the Nifty 50 index to end the year at 26,500, up 13% from current levels.

Morgan Stanley says the central government is likely to cut the deficit in February when it unveils its budget, which could lower bond yields and benefit listed companies from lower borrowing costs.

This view is echoed by equity strategists at Citi. They expect the Indian economy to grow by 6.5% this year, driven by boosting government spending on infrastructure, which He was in a slump last year.

“We have a constructive outlook on equity returns in light of more reasonable market valuations after recent corrections,” Citi's Surendra Goyal said in a note to clients. The investment bank also expects the Nifty to end the year at 26,000 – up 10.5%.

The Indian authorities expect its economy to grow by 6.4% in the fiscal year 2024-2025. India's National Statistical Office provided its first advance forecast on Tuesday Lowest since 2020 When India's GDP contracted by 5.8% due to the pandemic. This estimate is lower than the Reserve Bank of India's forecast of 6.6% for the current fiscal year. This is what economists at HSBC and HDFC Bank said Think about appreciation.

India wants its foreign missions to help boost exports. The Indian Ministry of Commerce has asked the Indian missions to do so Increase market intelligence efforts Government sources told CNBC-TV18 that it will identify export opportunities. Trade chiefs of Indian missions in 20 major countries will meet in a three-day meeting organized by the ministry that will focus on increasing exports.

Portfolio manager says Trump's second term will benefit Indian stocks. US President-elect Donald Trump's plans to impose heavy tariffs on China remain in place Geopolitical position of India “Favourable in this era of Trump 2.0,” according to GIB Asset Management Portfolio Manager Kunal Desai. “A number of Indian companies are benefiting from customers seeking a dual-sourcing approach in their supply chain,” Desai said.

India is a 'composite machine'. Investor interest in India waned at the end of 2024 due to the decline in Indian stocks during that period. However, one portfolio manager remains optimistic about the country. He says a decline in the market represents a buying opportunity Names of three Indian stocks to buy For the year 2025. (For subscribers only)

Indian stocks started the year lower. the Classy 50's The index closed at 23,500 points, declining by 1.8% from last week.

The yield on India's benchmark 10-year government bond has remained steady so far this year and has traded at around 6.76%.

In an interview with CNBC this week, Abhiram Eleswarapu, head of Indian equities at BNP Paribas, believes Indian markets are going through a “weak phase” at the moment because valuations are at a high level. However, this “shallow correction” may be over, and so are the markets He could Returns high single digits From March until the end of the year, Eleswarapu said.

Meanwhile, Pulkit Patten, Indian industries analyst at Goldman Sachs, pointed out that the bank expected India's cement industry is expected to expand in the second half of the year, indicating that “infrastructure spending is making a comeback.” Government spending, residential real estate and rural spending will constitute the bulk of these investments, leading to Relatively strong demand for infrastructure and related materials.