On Wednesday of this week, the Indian stock market hit a historic high, with news that the SENSEX 30 index had broken through the 80000 point mark for the first time during trading sweeping the screens of global financial media. On Thursday, the Indian stock market continued to rise, indicating that this frenzy is not yet over.
Market observers predict that the Indian stock market is expected to continue to rise, with a full year increase of 20%, boosted by increased government spending and sustained growth in corporate profits.
Indian stocks are expected to reach new highs
As the dust settles in India's general election, according to several strategists and investors surveyed by the media, the upcoming budget plan by the Indian government may stimulate consumer spending and infrastructure construction in India, which is a good omen for Indian companies.
Since the beginning of the year, the benchmark NSE Nifty 50 index in India has risen by 12% to over 24000 points, setting a new historical high. More than half of the 24 respondents estimated that by the end of 2024, the Indian NSE Nifty 50 index may rise to 26000 points, which means there is still more than 8% increase.
NSE Nifty 50 Index Year to Date Trend
In the recently concluded Indian general election, the Indian People's Party led by Prime Minister Modi, although still gaining a majority, has reduced parliamentary seats, prompting investors to increase their bets on the Indian consumer sector as they expect the Indian government to shift towards more populist measures to boost its own approval rating.
Meanwhile, the early arrival of this year's monsoon has also boosted the prospects of companies engaged in crop production such as rice, corn, and soybeans.
Bino Pathipampamil, head of research at Elara Capital in India, said, "Driven by increased profit margins, Indian companies have shown strong profitability over the past year, and growth in the fiscal year 2025 may exceed trend levels, keeping India's medium-term growth story intact."
Expected to benefit most from the consumer and financial sectors
Among the surveyed companies, 13 expect the profit growth of Nifty components in India to remain strong, but another 5 indicate that the market's optimism about future profits is somewhat excessive.
According to comprehensive data, analysts estimate that MSCI India Index constituent companies will see a year-on-year increase of 15.6% in earnings per share for the full year of 2024.
Investors are now turning their attention to the government budget plan that will be released this month, which will outline Modi's policy priorities under the new coalition government. Half of the respondents expect that the government's top priority will be to adopt various incentive measures to support consumption, while continuing to drive capital expenditures in infrastructure.
Respondents generally expect that non essential consumer goods stocks in the Indian stock market will benefit the most from this expected outlook, followed by financial and commodity stocks.
Jefferies Financial Group strategist Mahesh Nandurkar and others wrote in a report on June 24th, "The (Indian) government can please everyone with higher capital expenditures, social expenditures, and tighter finances."