India’s growth surprise to favor infrastructure and consumer stocks

India’s stronger-than-expected GDP print is likely to boost market sentiment, confirming that the economic slowdown has been arrested. Nifty futures point to a mildly positive opening, despite weakness across Asia, as tariff-related concerns persist. All eyes will be on the central bank’s monetary policy on Friday and high-frequency economic indicators like PMI.

Growth surprise to favor infra, consumer stocks 

India’s economic growth of 7.4 per cent in the January-March quarter marks the fastest expansion in a year. Analysts anticipate this pace to hold up, with the RBI expected to cut interest rates further and continue buying bonds to keep liquidity flowing. There’s scope for about 100 basis points of rate cuts, according to Abhishek Gupta, senior India economist at Bloomberg Economics. This bodes well for construction and infrastructure players, which stand to gain from sustained government capital expenditure and a healthy project pipeline. Consumer companies are also likely to benefit as rising incomes and improving rural sentiment boost demand across goods and services.

Cement sector ramps up

Cement makers have reported strong volume growth in the March quarter, driven by a resumption in government capex spending and a pickup in commercial activity, with industry leaders like Ultratech and JK Cements leading the pack. The uptick in the final quarter of the fiscal year also helped the sector sign off FY25 on a strong note, despite a muted performance in the first half. According to Systematix analysts, the sector is set for a more stable and profitable cycle, driven by consolidation-led discipline and sustained demand from infrastructure and housing.

Regulatory easing fuels BSE rally, but upside capped

Shares of India’s only listed stock exchange surged 26 per cent in May — the biggest monthly gain since September — driven by a stock market rebound and easing regulatory concerns. Sentiment improved after the market regulator’s move to a delta—based open interest measure for derivatives proved less disruptive than initially proposed. Additionally, clarity around the fixing of weekly options contracts helped lift a key overhang. Still, further upside may be limited. BSE shares are now trading less than 2 per cent below the average analyst price target of ₹2,715, according to Bloomberg data.

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Published on June 2, 2025