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Below the Quote on Market by Krishna Appala, Sr. Research Analyst, Capitalmind Research

“The recovery in broader markets continues, with the Midcap and Smallcap indices only -3.6% and -2.4% below their previous highs. In contrast, the Nifty 50 remains flat this week, yet to catch up. While global tensions from the Middle East, China, and US elections are subsiding, attention now shifts to the upcoming Q3 results. With slowing consumption, subdued GDP growth at 6.3% in Q2 FY25 (down from 7.8% in Q1), and financial stress reflected in rising non-performing assets in certain sectors, government capital expenditure is emerging as the critical driver for economic momentum.

The first half of FY25 saw the Centre’s capital expenditures decline 15.4% year-on-year to ?4.15 lakh crore, significantly below the ?11.1 lakh crore budgeted for the fiscal year. To meet annual goals, a sharp recovery in H2 is required, with the Centre needing to increase its capex by 52% in the October-March period. This revival is not only crucial for immediate recovery but also for long-term growth. The outcomes of this accelerated capex push in H2FY25 will likely define India’s economic trajectory, potentially offsetting consumption slowdowns and positioning the economy for a stronger rebound in FY26.”

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