- Macro Strategist
Switzerland, Intermediary
ChangeThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
A few of my colleagues and I were in India for a week late last year. While there, we met with Indian policymakers at the Ministry of Finance, the Reserve Bank of India (RBI), and other government offices. We also visited leaders of large Indian banks and several other corporations. Here are some of my high-level takeaways from that trip.
High-level takeaways
I came back very positive on the medium- to longer-term structural outlook for India, for the following reasons:
- The country’s growth catalysts are multiplying and broadening out, with domestic investment picking up, in part due to a strong infrastructure push by the central government and greater competition among the states.
- Bank balance sheets have not looked this healthy to me for more than a decade. Many corporates have de-levered through the COVID pandemic, and household balance sheets have also remained relatively unlevered.
- India’s fiscal balances are stretched, but with little corporate/bank issuance, the market should be able to absorb government paper. In addition, household savings are helping to finance the fiscal deficit via insurance and pension funds. (Medium term, though, the government may still need to raise taxes.)
- A new real estate cycle has begun following the 2014 bust, with more measured property price increases, while the hospitality and travel industries are still riding the wave of the post-pandemic boom phase.
- The manufacturing sector is also gaining significant traction, including in the smartphone supply chain and via a recent drive to “get on the map” in the semiconductor space.
- With domestic consumption and investment both strong, and monetary policy unlikely to tighten very aggressively, I expect India’s economy to grow by slightly less than 6% in 2023, even amid a potential global slowdown.
- Medium term, I believe the economy can sustain an annual growth pace of around 6%, as I see a virtuous cycle of greater capital formation supporting jobs, which should then boost consumption demand.
- Productivity improvements are being fueled by rapid digitalization and the big infrastructure push noted above. Reforms in areas such as real estate, banking, bankruptcy, and direct-subsidy transfers are beginning to bear fruit.
Risks I’m monitoring
Political and policy stability under Prime Minister Narendra Modi, who remains very popular with most voters (and, as of this writing, a shoo-in for reelection in May 2024), will be key to continued structural momentum in India.
Beyond that, my main near-term concerns are that: 1) the country’s core inflation rate is likely to remain elevated (comfortably above the RBI’s 4% target) for most of 2023; and 2) the current-account trade deficit may widen further from its already high levels as global demand likely softens. While the RBI’s monetary policy committee members sounded pretty dovish late last year, I suspect that the persistence of inflation may lead the central bank to eventually tighten policy a bit more than the market was pricing in at last check.
India equity outlook
I remain generally positive on Indian equities given the country’s favorable medium-term growth and earnings environment. While overall market valuation has been quite stretched from a near-term perspective, I still think there are plenty of opportunities for discerning investors at the individual stock level.
For example, I see potentially attractive medium-term opportunities in banks and insurers and in the hospitality industry (see above). I also like a number of companies that may be beneficiaries of the global response to climate change (e.g., renewables, electric vehicles), as well as those that appear poised to benefit from the migration of global supply chains out of China.
Related content
Expert
Related insights
Showing
of
Insights Posts
As India goes to the polls, is the case for Indian equities still compelling?
Continue reading
6
min
Article
2025-06-30
By design and by default: Industry consolidation gathers steam across India
Continue reading
Quick Take
2023-11-30
URL References
Related Insights
Stay up to date with the latest market insights and our point of view.
Read next
Showing
of
Insights Posts
Time to capitalise on the evolving role of bonds?
We outline why we think the new economic era is elevating the role of bonds as a source of attractive and stable income, downside protection and portfolio diversification.
2
min
Article
2025-09-30
As India goes to the polls, is the case for Indian equities still compelling?
While current Prime Minister Narendra Modi is expected to secure a third term, a full-scale win is not a foregone conclusion. Against this backdrop and continued investor enthusiasm for Indian equities, Equity Portfolio Manager Niraj Bhagwat and Investment Director Philip Brooks assess the macro case for India. Are higher valuations justified?
6
min
Article
2025-06-30
Reasons for optimism about Indian equities
Our experts explain why, despite criticisms that Indian equities trade at higher valuations today than they have historically, they may have the potential to help drive total returns over time.
Quick Take
2024-08-31
India equity's improving risk/return tradeoff
This is not your grandfather's India equity market. Equity Portfolio Manager Niraj Bhagwat and Investment Director Philip Brooks explain why and back their argument with risk/return data.
Quick Take
2024-04-30
By design and by default: Industry consolidation gathers steam across India
Equity Portfolio Manager Murali Srikantaiai sees increased industry consolidation in India as a largely positive trend from which some equity investors can (and should) seek to benefit.
Quick Take
2023-11-30
India equity: An unsung long-term performance story
Despite strong long-term performance, Indian equities are often overlooked. That may be a mistake, say Equity Portfolio Manager Niraj Bhagwat and Investment Director Philip Brooks.
Quick Take
2023-10-31
India: Growth drivers are in place
Following a recent visit to India, Macro Strategist Tushar Poddar shares his take on the country's changing macro environment and its equity market.
Continue reading
Quick Take
2023-09-30
Six reasons India may be on the cusp of a major upcycle
Numerous positive structural and cyclical factors are pointing towards a major economic upcycle in India over the next five to six years, in our view, creating a range of potential investment opportunities. We believe India’s market is supported by an evolving investment universe, powerful demographic trends, increasing urbanisation and rising wealth, export growth, geopolitical tailwinds and a supportive policy regime. These factors are coalescing at a time when the corporate deleveraging cycle of the last few years is coming to an end and a new upcycle in profitability could be beginning.
Continue reading
Quick Take
2022-12-30
URL References
Related Insights