India’s Economic Revival Fuels Return of Foreign Institutional Investors to Stock Market
India’s Economic Outlook Brightens, Report Says
A recent report by JM Financial Institutional Services indicates that India’s economic challenges have peaked, with various key metrics suggesting an improving outlook. The report notes that foreign institutional investors (FIIs) have invested a whopping $3.8 billion in Indian equities since March 20, likely sensing this positive trend.
The report cites several positives for both urban and rural economies, including above-average reservoir levels, increasing rural wages, lower tax rates, and an improving job market. The GDP grew at 6.2 per cent in Q3 FY25, up from 5.6 per cent in Q2 FY25. Food inflation has also seen a significant decline, dropping to 3.8 per cent in February. These developments bode well for the economy’s growth prospects.
The Reserve Bank of India (RBI) is expected to continue its policy easing measures, with another 25bps cut in repo rates potentially forthcoming in its April meeting, according to the report. The central government’s capital expenditure growth also picked up in December and January, further boosting the outlook. The report notes that the outlook for FY26E is decent, providing a sense of relief for investors.
Another positive development is the sitting on a large cash pile by domestic institutional investors (DIIs), with data as of February end suggesting a 5.4 per cent equity asset under management (AUM). This excess cash could potentially be deployed in the market, driving growth. The report also notes that the Nifty50 has corrected 11 per cent from its top since September 2024, making valuations more attractive.
The report highlights the potential for an uptick in the rural economy, driven by good monsoons and comfortable reservoir levels. The income tax cuts announced in the recent budget, which will forego revenue to the tune of Rs 1 lakh crore, should place money in the hands of the urban population, driving discretionary spends.
In conclusion, the report paints a picture of improving economic conditions in India, driven by a range of factors, including policy easing, capital expenditure growth, and other positive indicators. With the RBI and government taking steps to stimulate growth, investors may find India’s equities attractive, and the outlook for 2025 and beyond appears positively skewed.
Original Source: https://theshillongtimes.com/2025/03/28/fiis-return-to-stock-market-amid-boost-in-indias-economic-outlook-report/
Category : Economy,NATIONAL,News Alert
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Publish Date: 2025-03-28 15:59:00
