India’s economic growth continues to remain strong even in times when the world is facing economic turbulence says DSP Mutual Fund in the February 2023 issue of its monthly report Netra which tracks the latest economic trends and insights. The report highlighted that India’s high frequency indicators remain robust. These include healthy GST collections, near record high volume of petroleum products sold (a proxy for consumption), electronic toll (including Fastag) collections indicating brisk economic activity along with business activity and sentiments being positive.
The recent flat performance of the Nifty Index compared to a 26% rally in the MSCI Emerging markets index has resulted in the vanishing of the high valuation premium that India had over its emerging market peers. This is a positive development as foreign inflows in India had become muted due to high valuations. DSP Mutual Fund believes there is an opportunity in the bond market, as RBI has raised rates and corporate bond spreads have gone up.
This monetary policy is least disruptive, as rates are not as high as previous cycles, liquidity conditions are better, and corporate spreads are not very high. This will help in India’s growth from a long-term perspective. Sahil Kapoor, Market Strategist and head of products at DSP Mutual Fund said “There is a higher likelihood of better market backdrop going forward”.
