New Delhi [India], July 14 (ANI): India’s economic growth cycle may be nearing its lowest point, with a recovery anticipated in the coming quarters, according to a recent report by HSBC Mutual Fund. The report identifies a confluence of favorable macroeconomic factors—including easing interest rates, a decline in crude oil prices, and forecasts of a normal monsoon—as key enablers for renewed growth momentum.
“We believe the growth cycle in India may be bottoming out. Interest rate and liquidity cycles, declining crude prices, and a normal monsoon are all supportive of a pick-up in growth going forward,” the report noted.
While uncertainties in global trade are expected to remain a short-term drag on private capital expenditure, HSBC remains optimistic about India’s medium-term investment trajectory. The report highlights several growth drivers:
- Sustained government spending on infrastructure and manufacturing
- Revival in private sector investments
- Recovery in the real estate sector
It also underscores the rising momentum in renewable energy investments, localization of high-end technology components, and India’s expanding role in global supply chains—all of which could further accelerate economic growth.
On the market front, the report observes that Nifty valuations have surpassed their 5-year and 10-year averages due to a recent rally. Nonetheless, HSBC maintains a constructive stance on Indian equities, supported by robust medium-term fundamentals.
The report also addressed global risks, notably:
- Heightened geopolitical tensions
- Economic uncertainties
- The potential negative impact of reciprocal tariffs announced by the US, which could dampen both U.S. and global economic growth if sustained.
Despite these external headwinds, the report highlights encouraging domestic indicators:
- India’s GDP growth accelerated to 7.4% year-on-year in Q4FY25
- The government has introduced measures to stimulate private consumption, including income tax rate cuts in the latest Union Budget
- A weakening US dollar and declining crude prices may allow room for further policy easing
Additionally, the forecast of an above-normal monsoon is expected to boost rural demand, providing a further tailwind to domestic growth.
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