Profitable Companies, Robust Economy: How They Impact Investor Confidence

Recent reports by the National Stock Exchange (NSE) have shed light on the buoyant Indian stock market, attributing investor confidence to robust corporate earnings and impressive GDP growth figures that have exceeded expectations.

Representative Image (National Stock Exchange of India Limited – NSE)

The latest NSE report sheds light on the pivotal role of domestic investors in the recent bull run, contrasting the reduced involvement of foreign investors.

“Strong corporate earnings and higher-than-anticipated GDP growth have attracted domestic players, both direct and indirect, to take center stage in the markets as foreign interest wanes,” NSE explained. This shift underscores the evolving market dynamics, with local investors stepping up to fill the void left by their foreign counterparts.

The report also paints an optimistic picture for the Indian equity markets, buoyed by robust growth projections for the Indian economy. FY24 marks the third year of significant economic expansion, with a GDP growth rate of 8.2%, following impressive growth rates in the previous two years (9.7% in FY22 and 7.0% in FY23). This consistent pattern of over 7% annual growth solidifies India’s economic prowess.

Reinforcing this positive outlook, the Reserve Bank of India (RBI) forecasts a growth rate of 7.2% for the current year, cementing India’s position as the fastest-growing large economy globally.

On the international front, India’s balance of payments remains stable, boasting a current account surplus of USD 5.7 billion. This positive balance, coupled with S&P’s upgrade of India’s sovereign rating outlook to ‘Positive,’ bolsters the country’s economic prospects.

Furthermore, the government’s fiscal deficit has shown improvement, reaching 5.6% of GDP in FY24—a reduction of 20 basis points compared to the revised budget estimate. This achievement is attributed to enhanced tax collections and prudent expenditure management.

The report also underscores key macroeconomic events that will shape the latter half of the year, including the Union Budget announcement in July, followed by policy directions from the Federal Reserve (Fed) and the RBI. The insights and actions from these institutions will be pivotal in navigating the economic and market landscape in the coming months. (ANI)

Tarah Nguyen