India's economic growth will likely surprise on the upside in financial year 2025-26, according to Vaibhav Sanghavi, chief executive officer of ASK Hedge Solutions.
The government is focusing on both investment and consumption, which will support the economic growth in the upcoming quarters, he said on Wednesday, in a televised interaction with NDTV Profit.
India's gross domestic product growth moderated to a seven-quarter low of 5.4% in July-September. Although GDP growth improved to 6.2% in the subsequent quarter, the pace of growth remained slow as compared to the recent highs.
Analysts attributed the slowdown in India's economic growth to prolonged monetary tightening and a fall in India Inc.'s earnings growth. Also, persistent inflation bit into citizens' disposable income, which adversely impacted consumption in the country.
Sanghavi, who sees the potential of a surge in economic growth in fiscal 2026, said that the current government has always been focused on investments. "Now, welfare schemes are added to boost consumption. Tax cuts will increase the disposable income," he said.
Recently, Moody's said that India's GDP will increase past 6.5% in fiscal 2026. Tax cuts and increased capital expenditure from the government will support this pace of economic growth, as per the ratings agency.
What GDP Growth Means For Markets
Valuations of Indian companies will likely increase as a surge in GDP growth is generally accompanied with a revival in earnings, Sanghavi suggested. "Now, valuation is a factor of both the earnings and multiples. Potential of valuation going up will be higher as earnings rise from the second half of FY26," he said.
Consumer space will be in focus for next 15-18 months because of the tax cuts announced in the Union Budget, he said, adding that ASK Solution is "bullish on this space because of this reason", he said.
On equity markets, he said that the relief rally "has happened". There are a few global factors which will likely settle within few months, and from a strategic perspective, a potential trade deal with the US will "create a huge opportunity for India", he added.
If India is able to get the first-mover's advantage, then it would be "really positive", the analyst said, but added that there could be a temporary volatility in pharmaceutical and automobile spaces.
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