India's growth cycle may be bottoming out, domestic fundamentals strong for pick-up in growth: HSBC MF

The report noted that interest rate and liquidity cycle, decline in crude prices, and a normal monsoon are all supportive factors for a revival in growth.

"We believe growth cycle in India may be bottoming out. Interest rate and liquidity cycle, decline in crude prices and normal monsoon are all supportive of a pick-up in growth going forward," the report said.

However, the report highlighted that global trade-related uncertainty remains a headwind to private capital expenditure in the near term.

Despite this, the report expects India's investment cycle to be on a medium-term uptrend, supported by continued government investments in infrastructure and manufacturing, a pickup in private investments, and a recovery in the real estate cycle.

The report further stated that higher private investments in renewable energy and related supply chains, localization of higher-end technology components, and India becoming a more meaningful part of global supply chains will support faster growth in the coming years.

On the market outlook, it noted that Nifty valuations are modestly above their 10-year average. It said that the outlook for Indian equities remains constructive, supported by a robust medium-term growth scenario.

The report also referred to the Reserve Bank of India's recent monetary policy decision, where the central bank raised its FY26 GDP growth forecast to 6.8 per cent year-on-year from 6.5 per cent previously.

The RBI left key interest rates unchanged and maintained a neutral policy stance during its policy meeting on October 1, 2025. It, however, announced regulatory changes to support credit growth.

On the global front, the report said the macroeconomic environment remains challenging amid heightened geopolitical and economic uncertainties.

It noted that reciprocal tariffs announced by the US administration are likely to impact both the US and global growth outlooks. (ANI)