Citigroup Predicts Another Strong Year for India’s Stock Market in 2025

Citigroup Inc. is forecasting a 10th consecutive year of growth for India’s $5 trillion stock market, citing the country’s recovery in economic growth and strong corporate earnings as key drivers. The bank has set a target of 26,000 for the NSE Nifty 50 index, which implies a 10% return from its December 31 close. This forecast comes after the index ended 2024 approximately 5% higher than Citigroup’s earlier prediction of 22,500.

Robust Earnings and Economic Growth Outlook

In its latest analysis, Citigroup noted that India’s earnings per share (EPS) growth outlook remains robust, supported by the diverse range of listed companies in the country. Strategists, including Surendra Goyal, emphasized that with some policy support, the economy could return to around a 6.5% growth path in 2025, although a significant recovery in private investment might take longer to materialize.

Positive Sentiment Across Brokerages

Citigroup’s optimistic view aligns with that of Morgan Stanley, which also expects double-digit returns for the Indian market in 2025. Morgan Stanley has forecast an 18% rise for the BSE Sensex, driven by strong retail buying and demand outpacing the supply of new shares.

Strong Domestic Flows Driving the Market

In 2024, retail investors poured a record 1.5 trillion rupees into stocks on the National Stock Exchange of India Ltd. With retail participation continuing to rise, market analysts believe that domestic flows will act as a crucial buffer against challenges such as weak urban demand, a declining rupee, and higher global interest rates.

Despite global headwinds, including the surge in the US dollar, Citigroup’s Goyal anticipates that domestic investors will continue to support the market. Retail investors have consistently “bought the dips,” reinforcing a positive market sentiment and creating a solid foundation for 2025’s market performance.

India’s stock market outlook for 2025 is promising, with strong domestic participation and positive earnings projections offering an optimistic growth trajectory.

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