(MENAFN- KNN India) New Delhi, Nov 11 (KNN) India's domestic growth cycle may be nearing its trough, with improving macroeconomic conditions likely to strengthen momentum in the coming months, according to a report by HSBC Mutual Fund (MF).

The fund manager noted that easing interest rates and liquidity pressures, falling crude oil prices, and a normal monsoon are expected to support a pickup in economic activity.

“The growth cycle in India may be bottoming out. Interest rate and liquidity cycles, a decline in crude prices, and a normal monsoon are all supportive of a pickup in growth going forward,” the report said, reported ANI.

While global trade uncertainty continues to weigh on near-term private capital expenditure, the medium-term investment outlook remains positive.

Government spending on infrastructure and manufacturing, a revival in private investments, and improving real-estate demand are seen underpinning the investment cycle.

HSBC MF expects higher private capital spending in renewable energy, localisation of advanced technology components, and deeper integration into global supply chains to boost growth.

Despite Nifty valuations sitting modestly above their 10-year average, the fund remains constructive on Indian equities given the resilient medium-term outlook.

However, risks persist. Weak global growth, policy uncertainty - including tariff-related risks and geopolitical tensions - and the possibility of a moderation in government capital expenditure could weigh on momentum.
Mercantilist policies adopted by certain economies were also flagged as a potential drag on private investment sentiment.

Even so, the report highlighted rising capacity utilisation and continued expansion of production-linked incentives as key drivers that may support private sector capex.

Overall, HSBC MF expects domestic tailwinds and increasing private investment-particularly in clean energy-to help sustain India's growth trajectory.

(KNN Bureau)

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