India’s medium-term growth outlook appears optimistic, driven by increasing private capital expenditure and steady consumption, which contributed to a significant recovery in equities during October, according to a report released on Monday. “Nifty valuations are slightly above the 10-year average; we maintain a positive stance on Indian equities,” stated the HSBC Mutual Fund report. In the debt markets, the HSBC fund noted that the 2-4 year corporate bond segment presents appealing opportunities, suggesting that the inflation outlook and growth uncertainties could lead to a 25 basis points rate cut on December 5.
The report highlighted that the growth cycle may be reaching its lowest point, supported by interest rate and liquidity cycles, a decrease in crude prices, and a normal monsoon, which are all conducive to growth. Furthermore, the mutual fund indicated that reductions in GST rates and previous income tax cuts should enhance private consumption and encourage private capital expenditure amid global uncertainties.