Hana Securities evaluated India's last quarter growth rate of last year, which fell short of market expectations, as a "meaningful rebound" and maintained its overweight opinion on the Indian stock market. As a solid recovery is expected in the first quarter of this year as well, it is analyzed that downward pressure on the stock market will ease after June.
On the 5th, Geun-A Kim, a researcher at Hana Securities Research Center, stated in the report "Emerging Market Strategy - India 3Q GDP, Meaningful Rebound," "The notable aspects of this growth rate are the expansion of government spending and improvement in private consumption." According to the Indian Statistics Bureau, India's gross domestic product (GDP) for October to December 2024 (the third quarter of fiscal year 2025) increased by 6.2% compared to the same period last year. This is below both the Reserve Bank of India’s forecast (+6.8%) and the market consensus (+6.3%).
Researcher Kim mentioned that the previous quarter’s GDP growth was only 5.6%, saying, "Since doubts about India’s fundamentals had increased, the rebound to the 6% range in the third quarter of the fiscal year is quite significant." He specifically emphasized that government spending increased significantly for two consecutive quarters and that the expected additional interest rate cuts could lead to an economic stimulus effect through this expanded government spending. He also noted that private consumption, an essential condition for high growth, showed signs of improvement this time, stating that it "somewhat alleviated concerns about fundamentals."
Despite these positive signals, Researcher Kim pointed out that the reason why India’s quarterly growth rate released on the 28th of last month did not have a significant impact on the stock market was that a clear rebound in manufacturing had not yet been confirmed and that the Indian government’s annual growth target is high. To achieve the current target of 6.5%, GDP for the fourth quarter of the fiscal year, corresponding to January to March this year, must increase by 7.6%.
However, Researcher Kim predicted that "the Indian economy will show a solid recovery in the fourth quarter of the fiscal year (January to March 2025)." He evaluated, "Under high external uncertainty, it is highly likely that fiscal spending will continue to expand to limit economic downturns," and "improvements in rural consumption indicators have been confirmed, so the increase in private consumption due to expanded rural consumption will also be valid."
He maintained an overweight opinion on the Indian stock market from a long-term perspective, saying, "Downward pressure on the stock market will ease after June, when the solid growth of the Indian economy is further confirmed."
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