India Market Update

We are living in a time of great human suffering, as the pandemic and the wars between Ukraine and Russia, and Israel and Hamas, have taken a toll on millions of lives. India, a country that hosts one-fifth of the world’s population, is seeing various significant developments that impact its economy.

• Supply chain resilience: Supply shortages, which caused high inflation and windfall profits for some companies, have eased. This may hinder the performance of companies that benefited from rising prices, while helping others that have suffered from the shortages. However, one lasting change is the effort to restructure global supply chains to be more resilient to shocks. India stands to benefit from this trend.

• Technology adoption: Technology has become more integrated into our daily activities, especially in commerce. The increased adoption of technology lowers the cost of access between companies and their customers, as well as enhances business productivity. In India, financial institutions are among the beneficiaries of this trend. They can leverage India’s instant retail payment system, which handles nearly two-thirds of the GDP in value, to improve their product offerings and risk management capabilities.

• Energy transition: India’s economy has been vulnerable to the volatility of energy markets, mainly fossil fuels. This is driving India to establish policies aiming to accelerate the adoption of sustainable energy sources. Until the transition is complete, India will remain exposed to global energy price volatility.

• Equity culture: The low interest rate environment, combined with the ease of investing in equity markets - thanks to digital tools - are deepening the equity investment culture in India. This provides much needed risk capital for companies to continue innovation, in terms of both products and services.

• Geopolitical stance: India’s stance of promoting peace is aligned with its social, cultural, political, and economic stature in the world.