Talking about the recent rout in the Indian equities, Neelkanth Mishra, Chief Economist at Axis Bank, Head of Global Research at Axis Capital and UIDAI Chief, believes that there still remains a scope for another 10 percent correction in the market.
Mishra shared these views in a fireside interaction at Moneycontrol's Global Wealth Summit 2025, taking place in Mumbai today.
Adding to his predictions, Mishra said the most likely trigger behind the correction will be a growth in nominal GDP will grow but the market capitalisation will remain the same. He also added the multiples in the market will continue to remain volatile, especially since Indian markets came off of record highs, levels not seen before.
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While talking about a comfortable market-cap-to-GDP ratio, Mishra said there isn't a healthy level that can be prescribed to markets at all time. "There's always going to be a range within which the market will be trading," he said.
One of the big factors that sparked the sharp correction in the market as seen in the last six months has been a significant slowdown in earnings growth for India Inc. Headwinds like slow urban wage growth, faltering consumption, high base and waning pent-up demand weighed down heavily on FY25 corporate earnings.
However, Mishra offered a more optimistic view, suggesting that the growth slowdown is likely to ease in the medium term as India's structural story remains intact. "Don't think profits will be growing slower than nominal GDP in the next 5-6 years. That should be supportive for a higher market-cap-to-GDP," Mishra added.
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