India's economy showing strong signs of growth: Report

The report highlights that several positive trends are emerging on the domestic front, including higher GDP growth, easing inflation, and strong tax collections.

India’s GDP grew by 7.4 per cent in the fourth quarter of FY25, which is the highest reading in the last four quarters.

Inflation has remained below 4 per cent for four consecutive months, and GST collections have been rising steadily.

These signs indicate strong demand and stable activity in the formal sector of the economy.

The report also notes that India’s policy environment is now moving in a unified direction. Fiscal, monetary, and regulatory policies are all aimed at maintaining growth momentum.

The increased tax exemption limits that came into effect from April 2025 are expected to improve disposable incomes and boost consumption.

At the same time, the government’s capital expenditure continues to rise, supporting the investment cycle.

On the global front, the environment remains mixed. In April and May, markets faced worries over tariffs and geopolitical tensions.

However, the situation improved with a delay in global tariff implementation and a ceasefire announcement between India and Pakistan. This improved global sentiment has helped global equity markets, with the MSCI World Index reaching record highs.

Meanwhile, rising bond yields in Japan and China’s shift towards gold show that global investors are moving away from US Treasuries.

This could become a concern as the US faces refinancing of $9 trillion in debt this year.

However, a weaker Dollar Index could help emerging markets like India by attracting more foreign investments.

In the Indian stock market, valuations have increased as earnings have not grown at the same pace.

The Nifty-50’s one-year forward valuation has risen above its long-term average, and mid and small-cap stocks continue to trade at a premium.

This makes careful stock selection and active management more important for investors looking to generate higher returns, the report stated.