Goldman Sachs projects India will emerge as one of the best-performing markets in 2025, driven by exceptional macroeconomic stability and robust domestic catalysts. The investment bank highlights accelerating private investments, prudent fiscal management, and a resilient consumption base as key elements of India’s promising growth story.
Goldman Sachs predicts annual earnings growth of 18-20% for India over the next five years, buoyed by a fresh cycle of private capital expenditure and corporate balance sheet re-leveraging. The nation’s reduced beta to other emerging markets, now at 0.4, underscores its growing stability and premium valuation. This declining correlation with global markets highlights India’s ability to weather international volatility and maintain a consistent upward trajectory.
Macroeconomic stability plays a pivotal role in the bank’s bullish outlook. Fiscal consolidation, a positive real growth-to-real interest rate gap, and controlled inflation are projected to underpin strong domestic growth. Inflation for 2025 is expected to average 4.2%, with food inflation at a manageable 4.6%, supported by favourable weather conditions. However, Goldman Sachs notes potential risks from weather-related food supply disruptions that could influence short-term inflation dynamics.
A strategic pivot towards small and mid-cap stocks (SMID caps) and cyclical sectors, including Financials, Consumer Discretionary, Industrials, and Technology, is recommended to capture outsized returns. India’s projected Sensex earnings growth of 17.3% annually through FY27 surpasses consensus by 15%, underlining the market’s long-term potential.
India’s economic resilience extends to its ability to insulate against global shocks, such as potential US trade policies or geopolitical tensions. Favourable demographics and steady governance are forecasted to sustain GDP growth at 6.5% annually between 2025 and 2030. These factors contribute to the country’s stable outlook amidst modest global headwinds.
Goldman Sachs’ report cements India’s position as a compelling investment destination with a promising mix of structural growth drivers and macroeconomic prudence.
India is an emerging global powerhouse underpinned by thriving private investments, disciplined fiscal strategies, and demographic advantages.
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