ITI Mutual Fund expect the growth to moderate next year even though the structural long-term growth story for India remains intact driven by favourable demographics and stable governance.

The heightened trade friction, problems in China and global geopolitical situation is expected to put pressure on the fiscal positions of major economies, it said.

In the advanced economies, the focus of policy could shift away from inflation control to job creation and unemployment is likely to be closely tracked.

India seems to be no exception to the heightened volatility around, and currently appears to be relatively insulated against global shocks such as tariffs levied post change in US Presidency. Various key sectors are poised for a substantial growth, even as the broader economy shows signs of moderation.

Pockets of opportunity 

Rajesh Bhatia, Chief Investment Officer, ITI AMC said, slowing economic growth, high valuations and weak earnings-per-share revisions could keep markets range bound.

However, he said, there will pockets of opportunity in sectors such as private banks, IT, digital commerce, capital goods and pharma, that may have a clearer path to stronger earnings and are expected to perform well.

The Indian equity markets remained resilient for a major part of CY24, despite challenges posed by sticky inflation, weaker than expected September earnings, general elections outcome, FII outflows and global geopolitical uncertainty.

In 2024, bellwether Nifty and Sensex generated positive returns of 14 per cent and 13 per cent respectively. While Nifty 100, Nifty Mid Cap 150 and Nifty Small Cap 250 were up by 18 per cent, 28 per cent and 31 per cent respectively on an absolute basis.

The central bank though has reduced the real GDP growth estimates for FY25 to 6.6 per cent from 7.2 per cent earlier. The decelerated growth rate was partly due to decline in public capital expenditure. The central government’s capex growth declined from 30 per cent year-on-year CAGR between 2021 and 2024 to mid-single digits growth in nominal terms in 2025.

Future predictions

However, both the central government and listed corporations are expected to increase their investment next. Corporate order books are expanding across various sectors, and the number of ongoing projects has reached its highest levels since 2017. Private sector investment is projected to hit a decadal high of ₹55,122 billion, indicating a broad-based growth phase that could accelerate in the coming years.