This report comes from this week’s CNBC “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse and the big players behind its meteoric rise. Like what you see? You can subscribe here.

Indian stocks have had a bad start to the year. Concerns about high valuation multiples and lower earnings estimates have led to a steady decline in the company’s stock price nifty 50.

The index has now re-entered correction territory – down 10% since hitting its most recent high in late September.

In fact, the benchmark is now in the red so far this year. However, this is not unusual for investors. According to my count, on 7 trading days in the past 10 years, the Nifty 50 index turned negative on the 5th trading day of the year.

However, this time is different. Many analysts entered the new year expressing concerns about rising company valuations and slowing earnings growth.

Indian stocks are set to lead U.S. stocks, a far cry from the bullish sentiment seen last year. S&P 500 IndexIt rose more than 20% for the second consecutive year.

Equity strategists at HSBC believe the market’s pessimism is likely to persist.

The bank’s Asia-Pacific strategists led by Herald van said: “With earnings disappointing – with consensus lowering NIFTY 50 growth forecasts to 5% (FY25) from 15% – investors may reassess their positions, thereby limiting market returns,” Delinder said in a note to clients on Thursday. The investment bank downgraded Indian stocks to neutral.

Morgan Stanley notes that stocks underperformed bonds and gold last year for the first time in eight years (which, to be fair, outperformed most global markets).

“Over the long term, we believe equities will lead among financial assets, while gold will outperform among real assets. ” said Ridham Desai of the investment bank.

Many also believe that the Indian stock market is now ripe for growth after a long period of decline.

“India has hit bottom,” Bernstein strategist Venugopal Garre wrote in a note to clients last week. Garre expects economic growth to pick up in the next three to six months. The economy is accelerating and investors are urged to get ahead of the economic recovery. “It is recommended to invest ahead of the recovery,” he added. Bernstein expects the Nifty 50 index to end the year at 26,500 points, up 13% from current levels.

Morgan Stanley said the central government is likely to reduce its fiscal deficit when it unveils its budget in February, which could lower bond yields and lower borrowing costs for companies.

This view is echoed by Citi equity strategists. They expect India’s economy to grow 6.5% this year, driven by last year’s lackluster government infrastructure spending.

“We have a constructive outlook on equity returns given more reasonable market valuations following recent adjustments,” Citigroup’s Surendra Goyal said in a note to clients. The investment bank Nifty is also expected to end the year with 26,000 sales, a growth of 10.5%.

Indian authorities expect the economy to grow by 6.4% in the 2024-2025 fiscal year. India’s National Bureau of Statistics released its first advance forecast on Tuesday lowest since 2020 India’s GDP fell by 5.8% due to the epidemic. The estimate is lower than the Reserve Bank of India’s forecast of 6.6% for the current fiscal year. Here’s what economists at HSBC and HDFC Bank have to say Think about it and estimate it.

India hopes the country’s overseas missions will help boost exports. The Ministry of Commerce of India has requested the Indian Mission Increase market intelligence and identify export opportunities, government sources told CNBC-TV18. Business chiefs from India’s missions in 20 major countries will come together for a three-day conference organized by the ministry to focus on growing exports.

Portfolio manager says Trump’s second term will be good for Indian stocks. US President-elect Donald Trump plans to impose high tariffs on China India’s geopolitical positioning “It’s a plus in the Trump 2.0 era,” said Kunal Desai, portfolio manager at GIB Asset Management. “As customers look to adopt a dual-sourcing approach in their supply chains, many Indian companies are taking advantage of this,” Desai said.

India is a “composite machine”. Investor interest in India waned in late 2024 as Indian stocks retreated during the period. However, one portfolio manager remains bullish on the country. He said a falling market is a buying opportunity, and List three Indian stocks worth buying 2025. (Available to subscribers only)

Indian stocks fell at the start of the year. this nifty 50 The futures index closed near 23,500 points, down 1.8% from last week.

Benchmark 10-year Indian government bond yields have been flat so far this year, trading around 6.76%.

This week, Abhiram Eleswarapu, head of India equities at BNP Paribas, said on CNBC television that the Indian market is currently in a “soft phase” because valuations are at higher levels. However, this “shallow correction” may be coming to an end, and the market Can Return high single digit from March to the end of the year, Eleswarapu said.

Meanwhile, Goldman Sachs India industrials analyst Pulkit Patn noted that the bank expect India’s cement industry is set to expand in the second half of the year, suggesting “a return to infrastructure spending”. Government spending, residential real estate and rural spending will make up the bulk of this investment, resulting in Infrastructure demand is relatively strong and related materials.