India 2025: What’s next for Economy & Markets?

What is India’s outlook for 2025?

The Story

Just like every year, financial institutions publish their futuristic report card for the upcoming year, setting hopes and challenges for the upcoming year.

We are picking up key information from these reports to tell you what 2025 could look like. Let’s begin with macro trends.

Macro Trends

2024 was a year of contrasts, the Indian economy grew stronger, with 7.8% GDP growth in Jan-March and 6.7% in April-June. However, the second half witnessed slower economic growth with just 5.4% GDP growth and slower earnings growth of companies. Going ahead, Deloitte predicts India’s GDP growth to remain between 6.5% and 6.8% for FY2025-26.

Growth will be majorly driven by increasing domestic consumption and government spending, specifically, capital expenditure on infrastructure and manufacturing will be the driving force behind growth. Interestingly, another report by Standard Chartered has given projections for USD/INR currency exchange rate, gold, and crude oil prices as well. The USD/INR rate is expected to stay around 85.5 over the next year.

Gold, currently priced at $2600 per ounce, might increase to $2900. Meanwhile, crude oil, which is now over $70, could drop to $65.

For context, because we measure gold price in grams and not in ounces, at the current exchange rate ($1=₹85.5), gold’s projected price translates into ₹87,461 per 10 grams.

Now let’s divert our attention to markets.

2025: Market Outlook

For FY26, Earnings Per Share (EPS), which is the profit earned for each share of Nifty 50 companies, is expected to grow 14%, signaling better profitability and potential for higher returns for investors.

Talking about Nifty 50, here are the projections of different institutions for the upcoming year.

This consensus across institutions points towards a year of optimism, with steady economic growth and markets primed for new highs.

Now if we are talking about markets, we can not ignore IPOs. 2024 was the year of IPOs as India witnessed record fundraising.

India’s IPO Boom

With a strong economic outlook, the Pantomath Group’s report predicts over ₹2 lakh crores in IPO fundraising in 2025.
In 2025, major banks predict Indian IPOs will be driven by tech startups, particularly in fintech and SaaS, alongside premium FMCG/D2C brands and renewable energy and infrastructure firms.

Rising Retail Investors

India’s investor base continued to grow robustly in 2024, with over 10.7 crore unique investors registered with the NSE as of November, with 1.5 crore investors joining the market in the first nine months. More and more young people are coming to the market. Today, 4 out of every 10 investors are under 30 years old. That’s a huge change from just five years ago when young investors made up less than a quarter of all investors.

We can see this in other ownership patterns as well. FIIs have traditionally held the largest stake in Indian equities. However, their share has been on a steady decline since 2020 and is now at its lowest level in over a decade. At the same time, the share of DIIs has been on the rise.

To Conclude

So, what does all this mean for 2025? In short, India is in a strong position.

With steady economic growth, a thriving capital market and more young investors getting involved, the outlook is bright. We’re seeing a shift in market dynamics, with domestic investors playing a bigger role, which adds stability. That’s a wrap for Day 1! Stay tuned for our Weekend edition, where we’ll dive deeper into the sectors and mutual fund categories to watch out for in 2025.