Macquarie predicts 10% correction in Indian stock markets by mid-2025
What's the story
Sandeep Bhatia, Managing Director and Head of Equity India at Macquarie Capital, has predicted a possible 10% correction in the Indian stock markets in the first half of 2025.
The expected fall would be driven more by global factors than domestic ones.
Bhatia stressed "India needs to manage a Trump presidency well," adding that this would be a key factor for market performance in 2025.
Market balance
Growth rebound could offset market challenges
Bhatia also hinted that a rebound in growth could offset some of the expected market headwinds.
He was skeptical about domestic liquidity always being a safety net, saying it can only cushion the impact of earnings disappointments.
This perspective highlights the significance of economic growth in keeping the market stable in the face of global headwinds.
Market concerns
Macquarie flags concerns over high promoter, private equity selling
Bhatia and Aditya Suresh, Managing Director and Head of India Research at Macquarie, have flagged the high levels of promoter and private equity selling through offer for sale in IPOs.
Bhatia observed a shift in market dynamics saying, "At the beginning of the bull market, the investors have the cash and the promoters have the vision."
He said toward its end, it's promoters who hold cash while investors are left with just vision.
Sectoral trends
Consumption remains weak amid market uncertainty
The Macquarie leaders also emphasized that consumption, a key driver of the Indian economy, remains weak.
Bhatia said while the worst may be over, recovery will be gradual.
Suresh said this recovery is uneven across different segments of the market with top-end consumption faring better than others, but momentum is slowing down.
Market optimism
Macquarie maintains optimism for certain defensive sectors
Despite the potential market downturn and uneven consumption recovery, Macquarie stays positive on certain defensive sectors.
"Our mindset is defensive. Within that defensive construct, our positioning is in IT, pharma, and financials," Suresh said.
This position shows a strategic approach toward weathering potential market volatility by concentrating on sectors that are typically seen as more robust during economic downturns.