Strategic Allocation Outlook
Supportive macro and easing bias favour carry, selective equities and strategic commodity exposure
Summary
Stability Improving, Growth Recovery Still Uneven
What has changed
- Inflation has cooled sharply across headline and core measures, easing cost pressures and enabling a more accommodative policy stance.
- Financial conditions have improved, with steady bank credit growth, adequate liquidity, and comfortable forex reserves supporting systemic stability.
- Growth indicators show mixed signals — services remain resilient, but industrial momentum and power demand have softened.
- Consumption trends are uneven: urban sentiment has rebounded meaningfully, while rural confidence remains cautious and selective.
Our macro assessment
- India has transitioned into a low-inflation, stable-macro phase, reducing downside risks to growth.
- However, the recovery is not yet broad-based — nominal growth, capex traction, and mass consumption remain measured.
- External pressures persist through trade deficits, capital flow volatility, and currency weakness, keeping the macro balance fragile but manageable.
Way forward
- The sustainability of growth will depend on translation of easier financial conditions into durable consumption and private investment.
- Urban demand is likely to lead the cycle, while rural recovery may lag until income visibility improves.
- Markets are expected to remain earnings-driven rather than liquidity-led, favouring selectivity over broad re-rating.
- Overall, the macro backdrop is constructively stable, but the next phase of upside will require stronger follow-through in demand and earnings.
Macro Tracker
Current Economic Positioning
Macro Dashboard (1/2)
Key Indicators (Last 10 Months, YoY %)
Macro Dashboard (2/2)
Key Indicators (Last 10 Months, YoY %)
