Q2 GDP shocker: Will stock market dance to the tunes of macro worries?
Q2 earnings season, the worst since June 2020, was not enough, stock market investors are now dealing with another headache after the Q2 GDP growth of 5.4% was at its lowest in the last seven quarters.
With Sensex and Nifty already down 7-8% from their peaks amid record-breaking pullout by FIIs, brokerages are now lowering the India GDP targets which may eventually start reflecting on the equity market outlook as well.
Goldman Sachs has lowered India's real GDP growth estimates for FY25 by 40 basis points to 6%, while Nomura has lowered it from 5.7% to 6%. UBS has also reduced its estimate of real GDP growth to 6.3%, while Citi has lowered it to 6.4% YoY vs 7% earlier.
In the near term, analysts say that the Q2 GDP shocker of 4% will weigh on markets, but the impact is unlikely to be significant since part of the declining growth was factored in by the market after the disappointing Q2 results.
«We do not see the case for a major market sell-off but reiterate that near-term upside is also limited due to earnings weakness and valuations. We keep our Dec-25E Nifty target unchanged at 25,000. An incremental correction over 5% in the Nifty is an entry opportunity, in our view,» said Emkay Global's research head Seshadri Sen.
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