Indian stock markets get a band-aid, but chronic pain remains

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Subscribe to enjoy similar stories. The thumping victory of the Bharatiya Janata Party and its allies (Mahayuti) in Maharashtra assembly election means political stability with more synchronization of economic policies between the Centre and the state. The Mahayuti coalition’s promise of increased focus on planned urban development in Mumbai bodes well for real estate developers, construction, and infrastructure stocks.

Moreover, developments in the economically significant state tend to shape foreign investors' perceptions of India. On Monday, benchmark indices Nifty50 and BSE Sensex rose over 1% each. True, improved investor sentiment is a given after the Maharashtra state election, but ongoing fundamental challenges cannot be ignored.

Foreign portfolio investors have been on a selling spree, offloading Indian stocks worth ₹21,840 crore in 2024 so far, showed NSDL data. The recently concluded September quarter (Q2FY25) earnings do not bring good tidings. Profit after tax growth for BSE500 companies (excluding oil marketing companies) slipped further to 8% from 10% in Q1FY25 and 21% in FY24 with most sectors barring BFSI posting a sharp slowdown, showed an analysis by Nuvama Research.

Blame the fading input cost benefits here. Revenue growth of just 6% in Q2FY25 makes it the sixth consecutive quarter of sub-10% growth, added Nuvama. Also Read: India Inc's Q2 has been tepid. Is a recovery in sight? Consumption has emerged as a weak link, while select segments of banking and financial services are seeing asset-quality stress.