'Oil, RBI surplus, falling inflation: India's recipe for a big comeback'

Look, folks, we're seeing some exciting things in India. Corporate activity is slowing down, but not great, except in utilities, which are doing well. The government's been steady and very strong, considering the tough neighbourhood. We all know what's going on over there — some distraught neighbours, not good!

The Indian consumer? Weak. Spending is down. Two-wheelers, cars—nobody's buying like they used to. That tells you everything. But here's the kicker—Foreign Institutional Investors — they left India for six months. But guess what? They're coming back. They see the opportunity. They see that India's corporate earnings are about to turn the corner.

Now, because of this, the Indian rupee is stronger—much stronger—against the US dollar. That's big. Long-term investors? — they're coming back. They see a future. And let's not forget the domestic investors — they stood tall and didn't flinch. War, tariffs, chaos — it didn't matter. Very loyal. Very strong.

India signed a big trade deal with the UK — a big win. Tremendous potential. That's going to open the floodgates for more deals. That was a brilliant move. Global inflation is coming down, which is good, but what about all the trade drama? It's hurting consumer confidence. People are nervous, and who can blame them?

Just look at what's happened — Israel, Gaza, Ukraine, Pakistan, tariffs. A total disaster. Markets went crazy. Nifty went down 17%, then up 20% — wild ride! If you held the wrong stocks, you probably lost money. New-age tech? Metals? Down. But the financials—strong, solid—pulled the market up. Smart money went there.

Corporate India? Confused. And earnings? Cut 3-5% — not ideal. But here's the exciting part: The market's looking for a spark. And guess what? We just got it.

The RBI just gave the government a surplus of ₹2.69 lakh crore. That's right. That's “more” than Rs. 2.1 lakh crore last year. And WAY more than ₹87,420 crore in 2023. Huge increase!

What does it mean? It means the government can spend — on defense, capital investments, welfare — and could plug the gap in tax collections and those ever-so-slow disinvestment plans. It's a game-changer.

Banks? Slowing down a bit, sure, but still healthy. Margins are tighter, but volumes are up. Government banks — are beautiful right now. Moro loan stress? Easing. Regulations? Loosening up. It's all looking very promising.

Financial services — expected to grow earnings by 15 to 19% next year. That's called a recovery.

And with the RBI surplus? Think big — Railway capex in the Northeast, battery storage for trains, energy from thermal plants. The big players—Adani, Tata — they're all in. Big investments coming.

Oil? It's falling — 16% down. Great for India. It's not a slowdown—just too much supply. OPEC's playing the volume game. Cheaper oil means a lower import bill—beautiful economics.

Conclusion

Put it all together — falling oil, RBI surplus, falling inflation—you've got the perfect recipe for a big comeback. India's going to roar back. And folks, we all live in hope — but this? This isn't just hope. This is “winning.”

The author, Chakri Lokapriya, is the CIO Equities of LGT Wealth India.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making investment decisions.