Nifty 50 and Sensex likely to stay range-bound over the next few months

 

India's GDP is expected to grow to USD 7.5 trillion in 2030 from present USD 3.8 trillion in 2024. 
  • This implies India Construction and other industry segments. 
  • As such the adds another India in 7 years and set to become the Manufacturing Hub for the World
  •   This is a big positive for India as no other economy in the world has such high growth rate  
  •    Passenger vehicle sales are projected to reach 6 million units by 2030, with a Compound Annual Growth Rate (CAGR) of 5.6% from 2024 to 2030  
  •   The Indian steel industry is experiencing robust growth,  driven by strong domestic demand and government support. Projections indicate significant increases in both production and consumption, with the industry aiming to 300 million tonnes crude steel capacity by 2030-31. 
  • Per capita steel consumption is also expected to rise, products development.
India's GDP grows at 7.4% in Q4 FY25; full-year growth estimated at 6.5%
  • India’s real gross domestic product (GDP) growth for the fourth quarter (Q4) of financial year 2024-25 (FY25) stood at 7.4 per cent, according to data released by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) on Friday. 
  • For the full financial year 2024-25, real GDP growth stood at 6.5 per cent, slightly below the Reserve Bank of India’s (RBI) projection of 6.6 per cent for the year.
  • The central bank had forecast Q4 growth at 7.2 per cent, but the actual figure for the fourth quarter surpassed this at 7.4 per cent. For the ongoing financial year (FY26), the RBI has pegged GDP growth at 6.5 per cent.
  • Among the sectors, the construction industry led growth with a 9.4 per cent increase over the year and a striking 10.8 per cent jump in Q4. 
  • Public administration, defence, and other services grew 8.9 per cent for the year, while financial, real estate, and professional services rose by 7.2 per cent.
  • On the expenditure side, private final consumption expenditure (PFCE), a key driver of demand, grew by 7.2 per cent in FY25, up from 5.6 per cent a year ago. Gross fixed capital formation (GFCF), representing investment, rose 7.1 per cent annually and 9.4 per cent in Q4.
  • India’s GDP growth rate for the Q3 FY25 was 6.2 per cent, which marked a recovery from the previous quarter, when GDP growth fell to a seven-quarter low of 5.4 per cent in Q2 FY25. The Q3 rebound was supported by robust service sector performance and an uptick in government capital expenditure. The GDP growth in Q1 FY25 had been 6.7 per cent.
Nifty 50 and Sensex likely to stay range-bound over the next few months
  • The benchmark indices Nifty 50 and Sensex, along with their large-cap peers are likely to stay range-bound over the next few months, given the lofty valuations across the markets, low consumption and global uncertainties, according to Kotak Institutional Equities' Sanjeev Prasad.

  • In a report titled 'Stuck!', Prasad, once again, detailed the high valuations, calling Dalal Streel 'blissfully ignorant'. "The Indian market remains blissfully ignorant of the reality of a sluggish domestic outlook with likely continued weakness in consumption demand and likely slowdown in investment demand and a challenged global macroenvironment with likely low growth and possibly high inflation," the report said.

  • The report noted that valuations of the Indian market and of most sectors and stocks are quite rich and well above fair values based on any sensible valuation framework. This would suggest that investors, both institutional and retail, are yet to reconcile with the new reality.

  • According to Kotak Institutional Equities, valuations have stayed at high levels across stocks and sectors, despite earnings downgrades. This, to the brokerage, suggests that either the market does not care about valuations and/or the market does not care about earnings.

  • "In our view, this nonchalant attitude perhaps reflects the market’s confidence in retail investors sustaining their hitherto price-agnostic purchase of stocks through mutual funds and FPIs staying positive on Indian equities based on a ‘narrative’ of a lack of alternatives in EMs," the report added.

  • Further, the research firm also expects a slowdown in India’s GDP growth, with a modest recovery in consumption being offset by likely lower growth in investment. "We would note that strong government and household capex over the past 3-4 years and robust consumption in high-income households in the past two years have driven GDP growth while weak consumption in low-and-middle-income households has been a drag on overall GDP growth."

  • Along with high equity valuations and economic slowdown, Kotak Institutional Equities also noted that the global outlook is highly uncertain in light of the ongoing trade and tariff war between countries. "The flip-flop policies of the US administration on the tariff issue have created a great deal of uncertainties with respect to global growth and inflation."

    Global and Indian markets have already priced in the best-case scenario of the US and its major trade partners, including India, concluding trade agreements before the July 9 deadline

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