Citi expects financials, telecom, healthcare, and cement to benefit from domestic demand recovery and policy support. “Beyond that, there are some specific themes we like. For example, the domestic travel market remains strong, and companies in this space should continue to perform well. In contrast, we remain relatively cautious on IT services and consumption beyond a few pockets,” Goyal added.
Foreign investor sentiment is also improving. Despite recent outflows, India’s growing weight in emerging market indices is making it harder for global investors to ignore. “India’s weightage in EM indices has increased substantially from 8-9% a few years ago to around 17% today,” Goyal said.
Also Read: US Fed likely to cut rates two to three times this year, says Manulife’s Marc Franklin
Samiran Chakraborty, Chief Economist-India at Citi, said RBI’s policy stance is expected to remain supportive, with Citi forecasting at least 50 basis points of rate cuts this year, even if the US Federal Reserve does not move. “India’s capital flows are more sensitive to growth than interest rate differentials with the US,” he said.
Citi has factored in the potential impact of US-India tariff discussions as a minor downside risk, estimating that tariffs could reduce gross domestic product (GDP) growth by 0.2%.
Also Read: RBI’s forex swap, bond purchase to ease liquidity and lower borrowing costs
While the overall outlook remains strong, some concerns persist. Geopolitical risks and uncertainties around private investment could weigh on sentiment in the near term.
Kunal Shah, Director-India Banks & Financials at Citi, said that while near-term uncertainties remain, especially in banking, valuations have adjusted to reflect potential risks.
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(Edited by : Unnikrishnan)
