● Economic recovery: India’s economic recovery appears relatively better than developed and major developing economies. However, major economic parameters reveals a slow economic recovery on 3 year absolute CAGR basis. India’s Q1FY23 GDP grew at 1.3% CAGR over last three years, despite growing 13.5% YoY basis. We believe this is due to weaker recovery in lowincome household.

● Interest rate and Inflation: RBI has hiked repo rate by 50bps to 5.9% in recently concluded meeting in order to keep inflation under control. RBI has kept inflation expectation at 7.3% for Q2FY23 with moderation thereafter for subsequent quarters. However, GDP forecast has been revised downwards by 30bps to 7% for FY23. Government continue to thrust on supporting growth with keeping inflation under control.

● GST collections: Collection continues to inch higher on m-o-m basis with September month collection remains robust at Rs 1.48tn. GST collection for 6MFY23 grew at 13.8% on three year CAGR basis as collection has been robust in recent months and running at a rate higher than the government budgeted. Robust collection does provide room to government to cut down GST rate in case of demand slowdown due to high inflation.

● Volatile crude and energy prices: We believe volatility in crude oil prices are likely to remain for some more time. Recent decline in crude oil prices is positive for Indian economy as India is net importer. On the other hand, energy crises due to higher gas prices in Europe is opening up a lot of opportunities for Indian manufacturers in energy intensive sectors where European players are present.

● Monsoon update: Rainfall at pan-India level is 7% more than normal level. However, uneven distribution of rains means several regions received deficient rainfall while others have seen normal-to-surplus overall showers during the season.