Are the Q3 Earnings curtain raisers for a brighter 2025 or cautionary tales for investors?” As the Indian economy flashes mixed signals, market players have begun to span Q3 earnings. After strong GDP growth and the initiative of the government, early 2024-25 corporate earnings don’t paint an upbeat picture, which raises the question: Is this the end of the recovery? In this blog, we track performance in Q3 Earnings Expectations, showcasing trending key developments and opportunities that 2025 may offer investors.
Overview of the Indian Economy
In the year 2024, the performance of the Indian economy was impressive and there was resilience. India’s GDP was projected to grow by approximately 7% in the year 2024. Given the current dynamics of the line, these growth rates become immense when juxtaposed against global economic highly challenging systems. India is poised to become one of the largest economies within another 5 years and achieve the $5 Trillion economy target by 2025.
The “make-in-India” brand will continue to spur manufacturing assisted by the continued success of the PLI scheme. As on now, India has become the second-largest mobile manufacturing hub in the world and is well on its way to significantly reduce import dependence. India’s merchandise exports reached $468 Billion between April to October 2024, reflecting the growing role of the Indian economy in global trade. The finance ministry has projected that Indian, with continued reforms and strong economic growth, could very well become the third-largest economy in the world within the next 3 years.
India has launched several noteworthy schemes that others are also trying to emulate. The PLI scheme has garnered significant investments in Electronics, Pharmaceuticals sector stocks and Automobiles. Making in India has successfully drawn increased Foreign Direct Investment.
For the financial year 2024-25, India’s capital expenditure budget saw 11.1% increase from nearly $133 billion.This boost aims to enhance infrastructure development including the conversion of 40,000 normal rail bogies to Vande Bharat standards. The execution of projects through PM Gati Shakti Yojna integrates 16 ministries and national schemes like Bharat Mala, Sagar Mala, Udaan and various industrial corridors creating a unified framework for roadways, railways, sports, waterways and airports.
Key Sectors to Watch in 2025
2025 is almost here, and with it comes exciting growth opportunities across industries.2025 is shaping up to be a year of sustainable growth, economic recovery and technological leaps across industries. Here’s a sneak peek at what’s set to shape new year:
- IT Sector: After a tough 2024, IT hiring is bouncing back stronger than ever! The push for AI, data science, and cybersecurity is driving demand with tier 2 cities emerging as new talent hubs. Plus, experienced professionals are in the spotlight like never before.
- Aviation: Domestic air travel is set to surpass 164 million passengers with new airport in Noida and Navi Mumbai ready to ease the load. The industry is also focusing on sustainability, with carbon neutrality taking centre stage.
- FMCG: Urban demand is back on track, and consumers are ready to splurge on quality products. Quick commerce is booming, and with inflation easing, rural schemes are expected to add even more momentum.
- Automotive: Rural recovery and premiumisation are powering growth in two-wheelers, EVs and tractors. The EV wave continues to electrify the market, offering exciting opportunities for innovation.
- Banking and financial services: Wealth management, insurance, and digital financial services are seeing soaring demand as consumers embrace tech-driven solutions.
- Defence: Government support and focus on local manufacturing are opening doors to cutting-edge advancements in defence technologies.
- Power and Solar Energy: Solar energy is leading the way, with a target of 500 GW capacity driving growth in the sector.
- Health sector: Expandingdiagnostics and hospital infrastructure are creating a robust foundation for healthcare with regulatory ease making it smoother than ever to innovate.
Q3 Earning expectations in FY 2024-25
Indian analysts are pessimistic about the third-quarter (Q3) earnings of the fiscal year 2024-25 and see a continuation of the first half’s downward trend. Sanjay H. Parekh of Sohum Asset Managers believes that the Q3 is expected to be weak. The price correction in the markets may be largely complete, but a time correction may happen while markets digest slow Q3 earnings before expectations of improvement in Q4 set the stage for growth in 2025.
Despite the short-term challenges, however, the prospects for long-term growth of the Indian economy will remain impressive. Deloitte sees GDP growth for fiscal 2024-25 between 7% and 7.2% and around 6.5% to 6.8% for the next fiscal year. These optimistic beliefs are underpinned by a strong balance sheet with the government, the corporate, and the banking sectors that place India on a firm footing for continuous economic acceleration.
However, doubts have recently arisen regarding corporate earnings. The July-September quarter was labeled a failure, the poorest in over four years, as more than half of Nifty 50 companies missed or just met analysts’ expectations. This led to the stock market going down by approximately 8% from its peak of late September amid fears of a broad economic slowdown.
In all, earnings for Q3 are likely to be muted. Nonetheless, given the strong fundamentals of the Indian economy, along with construction expenditures by the government expected in the second half of the fiscal year, it bodes fairly well for a substantive, albeit slow, recovery for corporate earnings and the stock market in the foreseeable future.
Stock Market Predictions 2025
India is likely to remain fastest growing major economy in the world and it is also expected to surpass the Japan to become the fourth largest economy during the course of 2025. Higher bond yield and strengthening of US dollar is expected to continue in early 2025 which will impact emerging economies including India by putting downward pressure on emerging market currencies. People are expecting that rupee may surpass 87 rupees per dollar mark. So, there’s going to be high volatility in currency and financial markets in 2025.
Since post pandemic period, government investment as a share of GDP has been rising and the budget estimate of FY 2025 for private investments has already reached 3.4% as a share of GDP. There’s a limit on further keeping increasing capital expenditure therefore, it is expected to take up the next phase of capital resurgence but despite a set of favourable conditions and deleveraging, cut in corporate taxes, etc., we don’t see private investment picking up in a sustained manner.
Consumption demand has seen uneven recovery. Post pandemic urban demand picked up but not rural demand. But in 2025, we expect rise in rural demand as well due to number of factors like Monsoon, increase in minimum support prices, decrease in agriculture cost inflation giving boost of farm income. On the other hand, Oil price shock is not going to have a very significant impact on inflation. because even this year around despite so many exogenous shocks despite geopolitical conflicts there were period of short-term spikes in oil prices but not sustained hike in oil prices. In the medium-term oil prices were stable so they are expected to remain stable or decline. As per world bank’s commodity Outlook report so if oil prices are expected to be stable it has a positive impact on inflation.
Implications for Investors
1. Capitalize on Emerging Sectors: IT sector stocks, renewable energy stocks, and the health sectors all represent paradigms of opportunity underpinned by innovation, sustainability, and government support.
2. Watch for Volatility in the Markets: Overseas currency and inflationary trends should be attended to when making investment decisions in 2025.
3. Realise the Strong Potential of Rural Consumption Recovery: FMCG, agriculture, and rural-facing investments could pay off in spades as rural consumption ramps up.
Conclusion
India’s economic narrative in 2024 proved its stance to adapt and innovate amid global uncertainties. The road to 2025 intends to build momentum with sustainability, innovation, and inclusive growth difficult to miss. It is a clarion call to the global investor that in a land of burgeoning supply and demand, India is ripe to make the transition into a major player on the world stage. Riding high on leaning sectors, market trends, and longer-term macro themes, you can find yourself associated with this transformational and opportunity-driven epoch. To know about investing in the best sectors and best stocks for 2025 to add to your watchlist, Visit Jarvis Invest.
