Signs of recovery: India’s slowdown may be ending; easing crude, steady liquidity boost outlook

India’s domestic growth cycle may be nearing its lowest point, with several supportive economic factors pointing to a possible rebound in the coming months, according to a report by HSBC Mutual Fund.The report noted that low interest rates, steady liquidity conditions, easing crude oil prices and a normal monsoon are all helping to create a more favourable environment for growth. It stated that “the growth cycle in India may be bottoming out. Interest rate and liquidity cycles, a decline in crude prices, and a normal monsoon are all supportive of a pickup in growth going forward.”While global trade-related uncertainty continues to weigh on private capital expenditure in the short term, HSBC Mutual Fund expects India’s investment cycle to stay on an upward trend over the medium term. As per news agency ANI, this growth will be supported by government-led spending on infrastructure and manufacturing, a revival in private sector investment, and a strengthening real estate market.The fund also anticipates stronger private investments in renewable energy, localisation of high-end technology components, and deeper integration into global supply chains—all of which could further drive economic expansion.On the equity front, the report mentioned that Nifty valuations are slightly above their ten-year average, but it remains “constructive on Indian equities” given the country’s resilient medium-term outlook.However, HSBC Mutual Fund cautioned that weak global growth, policy uncertainty, and geopolitical tensions could continue to pose risks. Possible threats include tariff measures, protectionist trade policies, and a slowdown in government capital expenditure.Despite these headwinds, the report pointed to several positives. Private sector investment recovery remains strong, supported by high capacity utilisation levels as per Reserve Bank of India data. Additionally, the ongoing expansion of the Production Linked Incentive (PLI) scheme is expected to further encourage investment in key industries.Concluding its outlook, the report said that higher private capex in renewable energy, combined with favourable domestic conditions, is likely to sustain India’s economic momentum over the medium term.