Key Points
India’s GDP expected to grow 6.5% in next year
US recession could spur lower commodity prices beneficial to India
RBI rate cuts anticipated to boost Indian economy
Amid geo-political risks like the possibility of a US recession and reciprocal tariffs, Bernstein’s India strategy offers a positive outlook for the economy in the coming year.
“Despite global uncertainties, India is well-positioned to benefit if a US recession materialises,” said the global brokerage in its note.
India’s growth trajectory has often been independent of the US economy, and past experiences show that India has typically recovered ahead of the US during economic slowdowns.
While the broader markets have faced corrections, India is expected to benefit as the global trade environment stabilises.
The Bernstein note maintained a positive view on the Nifty index, setting a year-end target of 26,500, though caution is advised as market sentiment could fluctuate based on global events.
A potential US recession could also lead to lower commodity prices, which could be beneficial for India, said Bernstein.
Commodities like crude oil, copper, aluminium, and steel, which are linked to US economic performance, might see suppressed prices, it added.
This would reduce India’s import bills, help keep inflation under control, and ease pressure on the Indian rupee.
Furthermore, the possibility of rate cuts could act as a catalyst for economic recovery in the latter half of the year, the note said.
Despite recent outflows of foreign institutional investments, domestic market participation remains strong.
The Indian stock market continues its strong upward momentum fuelled by several key factors, including expectations of a rate cut by the Reserve Bank of India (RBI), strong buying by domestic and foreign investors, and a positive outlook on the Indian economy by global analysts.
A stable Indian rupee, consistent buying by both domestic institutional investors (DIIs) and foreign institutional investors (FIIs), and Morgan Stanley’s latest strong outlook for the Indian economy and inflation have further boosted investors’ sentiment.
—IANS
