India’s economic outlook is strengthening with improving macro indicators, according to a new report from Motilal Oswal Private Wealth (MOPW) released on Friday. The report highlights an increasingly supportive environment for growth across various sectors, driven by domestic demand, stable inflation, and policy alignment.
India’s GDP grew by 7.4% in Q4 FY25, marking the strongest quarterly growth in the past year. This expansion reflects rising momentum across industries and highlights the resilience of the Indian economy amid global uncertainties.
Inflation has remained below 4% for four consecutive months, offering relief to consumers and strengthening the purchasing power in the economy. At the same time, GST collections have shown consistent growth, indicating robust demand and economic activity within the formal sector.
The report further points out that fiscal, monetary, and regulatory policies are now aligned to promote sustained growth. The new tax exemption limits effective from April 2025 are likely to enhance disposable incomes, supporting a rise in consumer spending.
Meanwhile, the government continues to invest heavily in infrastructure, with increased capital expenditure acting as a key driver in reviving the investment cycle.
Global Trends Mixed, But Favorable for India
On the global front, April and May were marked by fears over tariffs and rising geopolitical tensions. However, a delay in tariff implementation and a ceasefire between India and Pakistan improved global sentiment.
This helped lift global equity markets, with the MSCI World Index hitting record highs. Rising bond yields in Japan, and China’s increased demand for gold, reflect a shift away from US Treasuries among global investors.
With the U.S. facing a $9 trillion debt refinancing challenge, these trends could create concerns. However, a weaker Dollar Index could work in India’s favor by drawing increased foreign investments into emerging markets.
Equity Market Caution Amid Valuation Concerns
India’s stock market has seen a sharp increase in valuations, although corporate earnings haven’t kept pace. The Nifty-50’s one-year forward valuation now exceeds its long-term average, and mid- and small-cap stocks continue to trade at a premium.
This valuation expansion has made careful stock selection and active portfolio management crucial for investors aiming to generate strong returns, according to the report.
Overall, the report paints an optimistic picture of India’s economic trajectory, underpinned by strong fundamentals, coordinated policy support, and a favorable global shift towards emerging economies.
