India’s $5 trillion stock market is poised for a potential 20% gain for the entire year, driven by government spending and strong corporate earnings momentum. Market watchers and strategists predict a positive outlook for the Indian economy due to various factors, including the upcoming government budget which is expected to boost consumer spending and infrastructure development. This optimistic sentiment has led to forecasts indicating that the NSE Nifty 50 Index may reach up to 26,000 points by the end of 2024.
The recent elections in India, which resulted in a reduced majority for Prime Minister Narendra Modi’s party, have also contributed to the positive outlook. Investors are anticipating more populist measures and support for sectors like consumer goods and agriculture. The early monsoon season has further boosted prospects for companies involved in agricultural activities.
According to Bino Pathiparampil, head of research at Elara Capital, corporate earnings in India have been strong and are expected to continue growing in the coming years. Analysts project a 15.6% increase in earnings per share for companies listed on the MSCI India Index in 2024, outpacing the growth forecast for Chinese firms.
As investors await the government budget announcement, expected this month, there is optimism regarding the policy priorities of the new coalition government. The budget is likely to focus on supporting consumption, increasing capital expenditure for infrastructure, and boosting consumer demand. Analysts believe that sectors related to affordable housing, infrastructure development, and consumer goods will benefit the most from the budget allocations.
Overall, the positive sentiment surrounding India’s economy and stock market outlook has led investors to have a favorable view of consumer discretionary stocks, financial sector stocks, and commodities shares. With expectations of higher government spending, robust corporate earnings, and supportive policy measures, India’s stock market is poised for continued growth in the coming months.
