Daily Voice: This investment expert sees India recording 7% growth in FY25, says moderation likely in coming years
From a long term perspective, the India growth story seems to be on track with consistent reforms and proactive economic policies, said Jyoti Prakash Gadia of Resurgent India.
The Indian economy may still touch the 7 percent growth for the current fiscal (FY25) with better Rabi crop and current momentum of domestic demand, though there are some indications of moderation of growth in the coming years, Jyoti Prakash Gadia, the Managing Director at Resurgent India said in an interview to Moneycontrol.
On the interest rate cut cycle, he believes the actual timing of the rate cut will be entirely dependent on the inflation trajectory in the coming months, the supply side risks and global scenario.
RBI continues to keep a watchful eye, not showing its eagerness to have a rate cut too soon, said the Chartered Accountant, and Chartered Financial Analyst with more than 15 years of experience in the financial services industry.
Do you think the re-election of Donald Trump would complicate the outlook for China?
The re-election of Trump is likely to see a shift in the economic policies with a more US centric approach with likelihood of increased tariffs. This is expected to adversely impact and complicate the China story which is largely dependent on the exports-led growth. The internal economy of China is already showing weakening indications and Trump’s new polices are likely to worsen the situation.
Do you believe the US dollar rally poses a strong headwind for emerging market assets?
The initial indications of Trump’s new policies putting emphasis on internal strength of the US economy will have ramifications for US dollar versus other currencies. The emerging markets therefore may face volatility in their assets with fluctuations in dollar inflows for both foreign direct investment and foreign portfolio investment. India can, however, hope to cope up with the situation with better bilateral ties for boosting trade and investment on reciprocal basis.
Do you see the RBI signaling a rate cut in its December meeting, with an actual rate cut in the February policy meeting?
Based on the overall growth inflation matrix, the RBI has already shifted its stance from withdrawal of accommodation to neutral in the last monetary policy review in October 2024. The actual timing of the rate cut, will be entirely dependent on the inflation trajectory in the coming months, the supply side risks and global scenario, as RBI continues to keep a watchful eye, not showing its eagerness to have a rate cut too soon.
Do you see growth slowing down to around 6.5 percent for FY25, from over 7 percent growth forecast of RBI?
While there are some indications of moderation of growth in the coming years, the current year growth may still touch the 7% mark for 2024- 25 with better Rabi crop and current momentum of domestic demand.
Do you think the flow of IPOs will not get impacted due to current weakness in the markets? What are the factors driving the consistent IPOs flow in India?
The current weakness in market is largely due to volatility and uncertainties arising on account of global fluctuations about inflows in the near future. From a long term perspective, the India growth story seems to be on track with consistent reforms and proactive economic policies, which are expected to maintain a support for more IPOs from inherently strong groups and companies with good growth potential.
Do you think the banking sector will continue to outperform Market from here on?
The performance of the banking sector will largely dependent on the judicious growth oriented policies and meticulous implementation of strategies to maintain good revenue growth while containing NPAs (non-performing assets). In the recent times, the improvement in net interest margin due to the favourable interest rate movement where the lending rates grew faster than deposit rates supported the profit position. This scenario may not continue in future with interest rate cycle changing and the banks will have to look at new avenues to improve profitability and maintain growth.
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