Citigroup has joined the bullish camp, predicting a 10% increase in Indian stocks this year.

Citigroup expects India's $5 trillion stock market to rise for a 10th year, driven by a recovery in economic growth and strong corporate earnings. The brokerage set a target of 26,000 points for the country's benchmark NSE Nifty 50 index, implying a 10% gain from the close on December 31. That would be about 5% above the 22,500 points forecast by Wall Street banks for the index at the end of 2024. The brokerage's strategists, including Surendra Goyal, wrote in a report that "considering the diversification of listed companies, the earnings growth outlook for India remains strong with relatively low risk. With some policy support, the economy may recover to a growth trajectory of around 6.5% in 2025, although a strong private investment recovery may still be difficult to achieve." The brokerage's Goyal said that domestic fund flows remain "strong" and retail investors have been "buying on dips." He expects inflows from global funds to be affected by the surge in the US dollar. Morgan Stanley, which is also optimistic, expects double-digit returns from India's stock market. The bank said last week that retail buying is still outpacing new share supply, and expects India's another benchmark index, BSE Sensex, to rise 18% in 2025. Data shows that personal investors snapped up a record 1.5 trillion Indian rupees worth of Indian stocks in 2024. Market participants expect strong domestic fund flows to continue as a buffer against currency depreciation and rising global yields. Goyal of Citigroup said that domestic fund flows remain "strong" and retail investors have been "buying on dips." He expects inflows from global funds to be affected by the surge in the US dollar.