New Delhi, March 10 : A Goldman Sachs report has said that the worst seems to be behind for Indian equity markets in terms of economic growth and the earnings trajectory.

However, market volatility will likely remain high given global headwinds against the backdrop of reciprocal tariffs from the US, said the global brokerage in its note.

India reported 6.4 per cent GDP on a year-on-year basis in the fourth quarter of the calendar year 2024 as private consumption growth supported the GDP recovery.

India's GDP decline has bottomed out, according to economists at the brokerage, and the recovery will be gradual from here on.

High-frequency indicators across various sectors showed buoyant rural activity in January. They see growth ranging between 6.6 per cent and 7 per cent in the next four quarters, and India's GDP growth for calendar year 2025 to be at 6.4 per cent year-on-year.

The 40-basis-point budgeted fiscal consolidation suggests that peak drag growth from fiscal tightening is likely behind, even as the Indian government remains focused on fiscal consolidation, Goldman Sachs said.

"We expect earnings to stabilise in a couple of quarters," it added. However, Goldman Sachs noted that valuations still remain expensive for small and midcaps.

An HSBC report last week said that India's long-term outlook remains strong and the investment cycle is projected to be on a medium-term uptrend supported by government investment in infrastructure and manufacturing, pickup in private investments, and a recovery in the real estate cycle.

The report expects higher private investments in renewable energy and related supply chains, localisation of higher-end technology components, and India becoming a more meaningful part of global supply chains to support faster growth.

For India, GDP growth has improved to 6.2 per cent (YoY) in Q3 FY25. Central government capex spending is now expected to grow only at 7 per cent (YoY) in FY25 and at 10 per cent (YoY) in FY26. The RBI is also now trying to ease policy rates.

"We believe longer-term outlook remains strong," the report said.

/IANS