India's fiscal strength, rising consumption set stage for robust equity markets: Kotak MF report

Mumbai (Maharashtra) [India], December 3 : India's strong economic fundamentals and accelerating growth momentum are creating a favourable environment for equities, according to a report released by Kotak Mutual Fund.

The report highlights multiple indicators, from rising per capita GDP growth to fiscal prudence, strong manufacturing output and robust retail demand, that point towards a positive and resilient investment outlook for the country.

Kotak Mutual Fund noted that India's per capita GDP growth is outpacing major Asian peers. Between 2014 and 2024, India recorded an average growth rate of 8.56 per cent in per capita GDP (PPP), significantly higher than Indonesia at 5.83 per cent, the Philippines at 6.22 per cent, and Vietnam at 7.90 per cent.

This reflects strong income expansion and improving spending capacity among Indian households.

The report also highlighted India's fiscal strength compared to global economies. As of Q4 2024, India's core debt of the non-financial sector stood at 176 per cent of GDP, comprising 42 per cent household, 51 per cent corporate and 83 per cent government debt.

Importantly, India's total debt-to-GDP ratio has declined by 4 percentage points since Q1 2008, making it one of the few major economies to show such an improvement.

In contrast, countries like China and France saw total debt rise by 139 and 104 percentage points, respectively, over the same period. This highlights India's fiscal prudence and disciplined balance sheet management.

On the manufacturing front, India has now entered the global top five, ahead of South Korea, the UK and France. India's manufacturing output stands at USD 0.78 trillion. But it is still behind China at USD 4.16 trillion, the US at USD 2.49 trillion, Japan at USD 1.00 trillion and Germany at USD 0.85 trillion.

The report stated India's growing position in global manufacturing strengthens the medium-term economic outlook.

It also mentioned that consumer demand remains strong. Supported by GST cuts and festive spending, retail sales grew 11 per cent year-on-year during August-October 2025.

Monthly trends show sales rising from 5 per cent in January 2025 to 11 per cent by the Aug-Oct period.

The report further stated that credit growth in the banking system has begun to pick up, reflected in a higher Credit-to-Deposit Ratio. The narrowing gap between credit and deposit growth could ease pressure on banking margins and support profitability.

The report added that supportive macro fundamentals combined with balanced demand-supply conditions continue to offer a constructive outlook for the bond market as well.

Overall, the report suggested that India's economic resilience, fiscal strength, rising consumption, and expanding manufacturing role are creating a strong platform for equity market performance in the coming years.

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