Goldman Sachs has predicted India to be one of the best-performing emerging markets in 2025, driven by strong macroeconomic stability and strategic economic policies. The investment bank credits India’s progress to improving trade terms, effective inflation management, and reliable domestic capital.
The report expects annual earnings growth of 18-20% over the next 4-5 years. This is optimistic because of a rebound in private capital expenditure, corporate balance sheet re-leveraging, and discretionary spending. These trends have brought India’s beta to other emerging markets down to 0.4, which reflects the premium market valuations of the country.
Why Goldman Terms India as Best-Performing Emerging Markets in 2025?
Anticipating greater strength in the Indian fiscal space by the support from fiscal consolidation, increase in private investment, and positive real growth-real rates gap, Goldman projected FY27 for Sensex to outperform with an estimated compounded annual growth of 17.3%, way ahead of a 15% average consensus. The portfolio and sectoral strategy has also been planned to meet their expectation.
Goldman Sachs prefers cyclicals over defensives and favors SMID companies over large caps. The firm recommends overweight positions in the Financials, Consumer Discretionary, Industrials, and Technology sectors as it is bullish on the domestic demand story.
Indian equities have, furthermore, followed the trend of a decoupling pattern from world markets as shown. Yet global drivers such as shifts in policy, especially that by both the United States and China as well as risk from geo-politics will keep pushing India’s market.
Economic Resilience
This stability in governance, along with its favorable demographics, will help India weather global shocks, including geopolitical shifts and external tariffs. Goldman predicts that the average annual GDP growth for India from 2025 to 2030 is going to be 6.5%, thus reinforcing its long-term growth potential.
Headline inflation is expected to average 4.2% in 2025, while food inflation will be slightly higher at 4.6%. This is an improvement from 2024, which was skewed by elevated levels, and supported by favorable weather conditions and a good summer crop, but weather-related food supply disruptions remain a risk.
Goldman’s analysis confirms India’s resilience and attractiveness for investors, which is driven by structural reforms, robust earnings potential, and stable macroeconomic fundamentals.
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