Outlook for the Indian Economy & stock market in H2CY23 from Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

The outlook for the Indian economy is improving. India has the best growth- inflation balance among the large economies of the world: growth is resilient and inflation is falling. Leading indicators like GST collections, private capex, credit growth and PMI indicate the growth momentum to sustain.

However, there is no room for exuberance. Globally growth is low and there is a possibility of the U.S. economy slowing down in H2 of CY 2023. This can impact India’s exports and thereby India’s growth, too,

The ongoing rally in the market has made valuations very rich. Nifty is trading at above 20 times estimated FY 24 earnings. This is higher than the historical average. Momentum can take the market higher; but at high valuations risk is high. Some presently unknown negative developments can trigger a sharp correction. So, even while remaining invested in the market, investors have to be cautious.