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BUSINESS & TRADE AUGUST 07, 2026 | The Indian Eye 34

Positive Signals Emerge for Indian

Economy Despite Global Uncertainty

Strong domestic demand, improving foreign investor sentiment and resilient financial

markets suggest India remains well positioned for long-term growth.

OUR BUREAU Reserve Bank of India is likely to
maintain a policy approach broadly
New Delhi / Mumbai
aligned with the US Federal Reserve,
ndia’s economy is showing en- which has kept interest rates on hold.
couraging signs of strength even The biggest uncertainty facing
Ias global uncertainties continue to India remains the global environment.
cloud the investment landscape. After Geopolitical tensions, especially
nearly two years of sustained foreign developments involving Iran, con-
capital outflows, there are early in- tinue to influence international oil
dications that overseas investors are prices. As one of the world’s largest
beginning to reassess India positive- crude oil importers, India remains
ly. At the same time, strong domestic vulnerable to sustained increases in
consumption, healthy tax collections, energy costs, which affect inflation,
robust credit growth and continued the current account deficit and the
interest in Indian government bonds value of the rupee.
point to an economy that remains fun- Global financial conditions also
damentally resilient despite geopoliti- As one of the world’s largest crude oil importers, India remains vulnerable to sustained remain uncertain.
cal tensions and inflationary pressures. increases in energy costs, which affect inflation, the current account deficit and Shanker pointed to increasing
While risks from volatile oil prices, the value of the rupee (File photo) leverage among major US companies,
the Iran situation and global interest particularly amid massive investments
rates cannot be ignored, market ex- ably. His assessment that Indian equi- dia’s government bond market. in artificial intelligence infrastructure
perts believe India’s long-term growth ties are “probably oversold” suggests India’s inclusion in major glob- and data centres. Such developments
story remains intact. The discussions could keep global bond yields elevat-
at the ninth edition of the Motilal valuations have become more attrac- al bond indices has already begun ed, reducing the pace at which interest
tive for overseas investors seeking
attracting stable foreign investment
Oswal Business Impact Conference long-term opportunities. into government securities. Although rates decline internationally.
(MOBIC) in Mumbai reflected cau- Bloomberg has temporarily delayed Long-term fundamentals
tious optimism rather than exuber- Domestic economy including Indian Government Securi- The overall message emerging
ance, suggesting that India’s econom- Even more important than for- ties in its Global Aggregate Bond In- from MOBIC 2026 is one of cautious
ic fundamentals continue to inspire eign capital is the continued strength dex, market experts insist this should confidence. India is benefiting from
confidence among investors. of India’s domestic economy. not be interpreted as a negative ver- resilient domestic consumption, accel-
Agrawal painted a positive picture
Foreign investor sentiment of economic activity, saying there was dict on India’s sovereign debt. erating credit growth, healthy tax rev-
One of the most significant posi- Agrawal explained that bench- enues and growing international in-
tive developments is the apparent turn- a clear pickup across sectors. Several mark providers are adopting a cau- terest in both equity and debt markets.
key indicators support this assessment.
around in foreign investor sentiment. Automobile sales continue to tious operational approach to ensure While geopolitical uncertainty and in-
According to Motilal Oswal Fi- market systems function smoothly be- flation continue to create headwinds,
nancial Services Chairman Raamdeo remain strong, reflecting resilient fore full inclusion. they have not fundamentally weak-
Agrawal, foreign portfolio investors consumer demand despite higher Ashish Shanker, Managing Direc- ened the country’s growth trajectory.
borrowing costs. Healthy Goods and
(FPIs), who had remained persistent Services Tax (GST) collections indi- tor and CEO of Motilal Oswal Private The early return of foreign in-
sellers over the past two years, are cate that business activity and con- Wealth, echoed this view, arguing that vestors after prolonged selling could
beginning to return to Indian mar- the delay reflects broader global mar- mark an important turning point if
sumption remain robust. Meanwhile,
kets. He noted that substantial for- credit growth has accelerated sharply, ket dynamics rather than concerns supported by stable global conditions.
eign capital had already exited India rising to nearly 18 per cent compared specific to India. At the same time, structural reforms,
during this period, driven by relatively to around 9-10 per cent last year. Despite the positive outlook, ex- expanding financial markets and ris-
expensive market valuations, stronger Strong bank lending typically perts acknowledge that inflation con- ing domestic demand continue to
returns in competing global markets signals increased business invest- tinues to limit the scope for aggressive strengthen India’s long-term invest-
and the absence of an artificial intel- ment, higher consumer spending and monetary easing. ment appeal.
ligence-led investment boom compa- expanding economic activity. Cred- Shanker does not expect Indian For policymakers, the challenge
rable to that seen in the United States. it growth also reflects confidence interest rates to decline sharply in will be maintaining macroeconom-
However, Agrawal believes the the near future, pointing to persistent ic stability while supporting growth.
selling may have gone too far. among both lenders and borrowers global and domestic inflationary pres- For investors, the current environ-
about future prospects.
He observed that during the past sures. Imported inflation, particularly ment appears to offer opportunities
week there had been signs of a rever- Bond market confidence through higher commodity and energy grounded not in short-term opti-
sal, with foreign institutional investors Another encouraging trend is the prices, remains a significant concern. mism but in the enduring strength of
once again looking at India favour- growing international interest in In- Similarly, Agrawal believes the India’s economic fundamentals.

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