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The government is expected to focus on job creation and expand the production-linked incentive scheme in Budget 2025, while maintaining a fiscal deficit of 4.5%. There are unlikely to be structural changes in direct tax policy, but simplifications may be proposed, particularly for middle-class taxpayers. Increased capital spending, especially in infrastructure and rural sectors, is anticipated to support long-term economic growth.
UBS views the Indian property market as a structural growth opportunity, indicating it is far from its peak. Gautam Chhaochharia highlighted strong fundamentals such as affordability and inventory-to-sales ratios, suggesting significant growth potential, particularly in mid-segment housing, despite supply constraints in affordable housing. The sector's revival is linked to increasing wealth and demand for larger homes, with current inventory levels indicating room for further expansion.
The Indian real estate sector is poised for significant growth, according to UBS, which highlights strong fundamentals such as affordability and favorable inventory-to-sales ratios. Despite rising property prices, the market remains under-penetrated, with robust demand in mid-segment housing and a lag in affordable housing due to supply constraints. The analysis suggests a structural growth trajectory rather than a temporary recovery, driven by increasing wealth and interest in larger homes.
UBS's Gautam Chhaochharia asserts that the Indian real estate market is far from its peak, driven by strong fundamentals like affordability and favorable inventory-to-sales ratios. While premium housing is gaining momentum, the affordable segment faces supply constraints, yet mid-segment housing shows robust demand. The sector is viewed as a structural growth opportunity, supported by increasing wealth and a shift towards larger homes.
UBS identifies four catalysts that could break the Indian market's six-week consolidation, driven by high valuations and modest earnings growth. Key factors include improved consumer spending post-festive season, supportive fiscal and monetary policies, structural reforms after elections, and favorable global developments, particularly from the US. The banking sector shows promise despite FII outflows, while caution is advised for consumer discretionary stocks reliant on retail lending.
Gautam Chhaochharia, Head of Global Markets, India at UBS, highlights a cautious outlook on the Indian market due to high valuations, particularly in small caps. UBS favors Utilities and Industrials while being underweight on Autos, Consumer Discretionary, and selective Financials and Pharma stocks, citing growth and valuation concerns. Despite India's strong long-term growth prospects, its valuations remain rich compared to other emerging markets, prompting a cautious investment stance.
Gautam Chhaochharia, Head of Global Markets at UBS, emphasizes that local policy decisions will be the primary drivers of Indian markets, overshadowing global influences like Trump's policies. He expresses cautious optimism about economic growth and earnings recovery, while highlighting the need for policy support and potential rate cuts in the coming months. Chhaochharia notes that consumer sectors linked to rural recovery are better positioned for growth amidst current valuation concerns.
Gautam Chhaochharia
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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