India’s Growth Momentum Strengthens Amid Easing Inflation and Policy Alignment: MOPW Report
India’s macroeconomic landscape is becoming increasingly conducive to growth, according to a report released on Friday by Motilal Oswal Private Wealth (MOPW). The report outlines a confluence of favorable domestic indicators—rising GDP growth, moderating inflation, robust tax revenues, and aligned policy actions—positioning the country on a strong growth trajectory.
Domestic Indicators Show Strength
India’s GDP grew 7.4 percent in Q4 of FY25, marking the highest quarterly expansion in the last fiscal year. This growth is being complemented by subdued inflation, which has remained below 4 percent for four consecutive months, a level that boosts purchasing power and investor confidence.
Additionally, GST collections have shown a consistent upward trend, reinforcing optimism about consumption strength and formal sector activity.
“These indicators suggest that India’s economy is not only recovering but gaining momentum in a sustainable and broad-based manner,” the report said.
Unified Policy Push
The report emphasized that fiscal, monetary, and regulatory policies are now working in tandem to maintain and further propel this growth. Key measures include the revised tax exemption limits effective from April 2025, which are expected to enhance household disposable income and fuel consumer spending.
Simultaneously, the government’s continued focus on capital expenditure is supporting the investment cycle—an essential pillar for long-term economic expansion.
Global Trends: Mixed, But Easing Risks
Globally, the picture remains nuanced. Markets faced headwinds in April and May from concerns over trade tariffs and geopolitical tensions. However, sentiment improved with delays in tariff implementation and a ceasefire between India and Pakistan, which buoyed investor confidence.
The MSCI World Index reached record highs, reflecting an improved risk appetite globally.
Notably, the report flags rising bond yields in Japan and a shift in Chinese investors toward gold, indicating reduced demand for US Treasuries. This comes at a critical time when the US must refinance nearly $9 trillion in debt—a potential risk for global markets.
A weaker Dollar Index, however, could work in India’s favor by making emerging markets more attractive to foreign investors, possibly increasing capital inflows.
Market Valuation Caution
On the equity front, Indian markets have seen rising valuations outpace earnings growth. The Nifty 50’s forward valuation has climbed above its long-term average, while mid-cap and small-cap stocks continue to trade at elevated premiums.
“With valuations stretched, the importance of disciplined stock selection and active portfolio management becomes even more critical,” the report noted.
