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India Growth Tailwinds for Banks & Companies in 2024 – Implications Explained

Introduction

The article discusses S&P Global Ratings’ positive outlook for Indian banks and corporates in 2024, driven by broader economic growth, improving corporate health, and asset quality.

Analysis for a Layman

International rating agency S&P expects next year to be good for both large Indian companies across sectors and banks. As the overall economy is expected to keep growing well compared to the global slowdown, Indian corporate profits are seen rising nicely at 5-10% rates in 2024. Their financial health has already become quite strong after recovering from COVID troubles earlier. Similarly, for banks, concerns about bad loans are reducing as corporate finances are better now. So S&P expects lending activity to keep growing and low defaults helping banks make good profits too next year. Key sectors leading growth may be telecoms as usage rises and metals/chemicals as input costs fall.

India Growth Tailwinds for Banks & Companies in 2024

Original Analysis

The constructive outlook underpins the structural tailwinds for India Inc, steered by demand-side drivers and domestic orientation insulating against global recession. However, export-reliant sectors may still warrant moderated projections given trade channel inventory resets likely. Moreover, upticks remain uneven across corporates – conglomerates with pricing powers and financial engineering savvy expected to outperform standalone names lacking fiscal ammunition to tide temporary adversity. For banks, asset quality resilience provides operating stability to ride policy normalization headwinds while expanding market share. But deposit mobilization pressures persist amidst higher funding costs, necessitating prudent liquidity planning to sustain healthy credit growth without margin squeeze.

Impact on Retail Investors

For retail equity investors, the optimism indicates corporate earnings visibility in 2024 supporting market multiples amidst global fragility. Leading banks and high-quality names across telecom, commodities, and consumer sectors can retain upside momentum on growth delivery. However, selectivity is prudent with recession-resistant attributes equally crucial. Cyclical uptrends may get stretched so portfolio balance warranted rather than outright momentum chase in 2024. Investors should monitor global demand risks, import cost trajectories, and currency stability with inflation knock-on effects still lingering while adding resilient franchises on market dips.

Companies That May Gain:

  • Reliance Industries
  • ICICI Bank
  • Bharti Airtel
  • Tata Steel
  • Asian Paints

Companies That May Lose:

  • Tata Motors
  • Coal India

Conclusion

S&P’s upbeat 2024 outlook for India Inc and banks rides on inherent domestic demand dynamics yet remains contingent on navigating persistent global risks prudently. Investors can selectively accumulate but require balanced caution against extrapolative exuberance.

Citation:

ET Bureau. “‘Banks & Corporates to Sustain Growth Momentum in 2024’.” The Economic Times, 14 Dec.

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