Factors including valuations, inflation, weak currency and the upcoming general elections may make Indian equities less likely to outperform in 2023
Amid a challenging global macro environment, Indian markets are expected to outperform peers in 2023 but possibly at a slower pace, as reopening-of-the-economy boosts have faded and monetary tightening may further weigh on domestic demand. Analysts expect the new year to be bright for equities as bulk of the negative factors are behind us, but political jitters may impact markets in the second half of 2023 as India is headed for general elections in 2024.
Emerging markets are likely to benefit from a relatively more benign world compared to 2022, but India’s trailing outperformance may slow down in the first half of 2023 due to relative valuations.