Capview- October 2022

India’s economic journey to the summit is nothing short of an adventure. What started with sheer determination has led to a path strewn with worthwhile challenges. With three-quarters of the calendar year (or the first half of the financial year) gone by, the Indian economy takes a breather at the base camp.

While it reflects on the journey, it also assesses the climb ahead. As the dusk sets in, it is time to light up the campfire, gather all around, and exchange tales that led to the camp.

Like with most amateur camp nights, this one kicks off with tales of horror as well. The Indian economy’s story features a ghost whose popularity comes only second to Casper. The story is about India’s encounter with inflation.

While the world shrieks at the mention of inflation, India seems rather unrattled. With RBI playing guardian, India has been reasonably insulated against the runaway version of inflation. Insulated, not unscathed. Most of India’s inflation is imported through elevated energy and commodity prices. However,
through prudent policymaking during and after the pandemic, RBI has been able to control the most sensitive variant of inflation, the one pulled by demand. India bears the brunt of a globalised trade economy during a period of global trade crisis.

Advanced economies attempt to slay the inflation devil even if it opens the wormhole that recession is. Meanwhile, the rest of the world lives in limbo. A strengthening Dollar index has been taking a toll on emerging markets’ bourses and currencies; however, India seems to have decoupled to an extent.
Prudent stockpiling of forex reserves seems to be coming in handy when it matters the most as the central bank defends the INR. Again, in a prudent and measured manner.

Foreign capital turned away from Indian equities but continues to raise stakes in the fixed-income segment. Domestic participants continue reaffirming their belief in India’s economic growth story by buying into domestic equities. This juncture warrants a special shoutout to domestic retail investors who have come a long way to become a strong pillar for Indian capital markets.

There is so much that has happened and so much more that we anticipate on the subject of India’s economy, capital markets, and every Indian’s investment. Fisdom Research digs deeper into developments to extract valuable insights that bring forth the true essence that lurks behind headlines