In a recent report, Goldman Sachs outlined an optimistic outlook for the Indian markets and expects the Nifty to reach 21,800 by the end of 2024, implying a 12% return in rupee terms. However, the brokerage suggests that returns are likely to be back-loaded due to the challenging global backdrop and political uncertainty leading up to the elections.
Goldman Sachs forecasts corporate profits in India to grow by 15% in 2024 and an additional 14% in 2025, with the expected growth appearing to be broad-based across various sectors. The note highlights a preference for domestic sectors, including banks, autos, cement, industrials, and utilities.
Expressing optimism about India’s economic resilience in the fiscal year 2024, Goldman Sachs anticipates a steady growth rate of 6.3% year-on-year. Despite facing elevated headline inflation, the central bank is expected to refrain from monetary easing until October of the next year.
The forecast suggests a bifurcated narrative for 2024, with pre-election government spending driving growth in the first half of the year. Post-elections, the note anticipates a re-acceleration of investment growth, particularly from the private sector. Looking ahead to fiscal year 2025, Goldman Sachs estimates a GDP growth rate of 6.5%.
The projection acknowledges challenges posed by repeated supply shocks, likely keeping headline inflation above the target at 5.1% year-on-year on average throughout 2024. Government intervention is expected to play a role in curbing food inflation, especially in the context of an election year. Core inflation is predicted to moderately decline to 4.5% year-on-year on average in 2024, down from the estimated 5.1%.
Goldman Sachs remains optimistic about India’s economic prospects too, emphasising its resilience amidst global challenges and positioning the country for robust growth in the coming years.
