Indian markets could fall 10% in the first half of 2025, warns Macquarie

Indian markets could see a 10% correction in the first half of calendar year 2025, according to Sandeep Bhatia, Managing Director and Head of Equity India at Macquarie Capital.

He said this potential drop is likely to be driven by global factors rather than domestic ones, which marks a change for Indian markets.

“I’m not in a camp that domestic liquidity can always be a savior. It can actually cushion the impact of earnings disappointment. India needs to manage a Trump presidency well. That will be the most critical factor for markets in 2025,” he said adding that if growth rebounds, it could help balance some of the challenges.

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Both Bhatia and Aditya Suresh, Managing Director and Head of India Research at Macquarie, flagged concerns over high levels of promoter and private equity selling via offer for sale in initial public offerings (IPOs).

“At the beginning of the bull market, the investors have the cash and the promoters have the vision. And at the end of the bull market, the promoters have the cash and the investors are left with the vision,” Bhatia added.

Among sectoral trends, they noted that consumption, a key driver of the Indian economy, remain weak. While the worst is probably behind us, this will be a slow uptick, he noted.

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Suresh added that recovery within consumption is uneven. “The top-end consumption looks relatively better, but momentum is softening. The middle category continues to face challenges, while rural markets are showing early signs of improvement.”

Despite the challenges, Macquarie is optimistic about certain defensive sectors. “Our mindset is defensive. Within that defensive construct, our positioning is in IT, pharma, and financials,” Suresh said.

Watch the video for the full interview