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India Macro Outlook 2024 – Navigating Uncertainty

Deepak Shenoy12 min read

Executive Summary

India enters 2024 from a position of relative strength. GDP growth is expected to stay in the 6.5–7% range, inflation is moderating, and the RBI has room to ease policy rates in H2 2024. However, global headwinds — particularly US recession risk and China’s structural slowdown — pose meaningful downside risks.

GDP Growth Outlook

Our base case for India’s GDP growth in FY2024-25 is 6.8%, with upside risk from:

  • Strong domestic consumption
  • Government capex momentum (₹11.1 lakh crore budgeted)
  • Manufacturing shift via PLI schemes

The downside risk comes primarily from a prolonged global slowdown dampening exports and IT services revenue.

Inflation and RBI Policy

CPI inflation is expected to average 4.5–5.0% in FY25, within the RBI’s 2–6% target band. We expect the first rate cut in Q3 2024 (Oct–Dec), with a total of 50–75 bps of cuts through FY25.

Equity Market Implications

A rate cut cycle is historically positive for:

  1. Banks and NBFCs — Lower funding costs expand NIMs
  2. Real Estate — Affordability improves, volume picks up
  3. Consumer durables — Discretionary spending gets a boost

Our view: Stay overweight India equities. Any dip driven by global risk-off is a buying opportunity.

Key Risks

  • Global recession deepening, particularly the US
  • Crude oil spike above $100/bbl (India imports ~85% of needs)
  • Geopolitical escalation in West Asia
  • Domestic politics (election year uncertainty)

This analysis is for educational purposes only and should not be construed as investment advice.

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