India’s economy in resilient expansionary phase supporting high returns: Report

New Delhi, April 13 India’s economy is in a structurally resilient expansionary phase, and markets could deliver returns above long‑term averages as valuations are favourable, a report said on Monday.

The report from investment management firm OmniScience Capital said the economy is in a goldilocks phase with high real gross value added (GVA) growth of 7–8 per cent with inflation anchored within the Reserve Bank of India’s target band.

The recent market correction of around 13 per cent from the September 2024 peak is moderate and does not indicate a bear market, with the Nifty 50 trading at roughly 3x price‑to‑book and about 20x price‑to‑earnings. These levels are at or slightly below long‑term medians that imply forward expected returns driven by earnings delivery with support from multiple expansion.

The report said that recoveries from major drawdowns have historically taken around 24 months on average, reinforcing a typical three‑to‑five year holding period of equity markets.

The banking sector is in its strongest position in recent history, the report said adding that Gross NPAs has plummeted to 2–2.5 per cent, while a Capital Adequacy Ratio (CRAR) of around 17.2 per cent provides an estimated Rs 94 lakh crore in incremental lending potential without requiring fresh capital.

Growth and credit conditions remain supportive, with financial system strength enabling a strong expansion in the economy.

“With companies operating at high capital efficiency with clean corporate balance sheets, and bank NPAs at 20 year lows and ROAs at 20 year highs, high economic growth rates and low inflation, India is in a sweet spot, domestically, with economic factors aligning for a potential multi-year economic boom,” said Vikas V Gupta, OmniScience CEO & Chief Investment Strategist, .

With FY26 inflation estimated to be around 2 per cent-2.5 per cent, there is even room for absorbing high energy prices due to the US-Iran-Israel war without inflation crossing the upper end of RBI’s target, Gupta added.

Inflation has moved from nearly double-digit inflation in the early 2010s to 2.1 per cent in FY26, though exogenous energy shocks from the Iran conflict present near term cost-push risks.

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