Strong macro fundamentals and FPI flow lift India’s balance sheet

July 6, New Delhi – A fresh dip in worldwide oil prices, coupled with a slowdown in foreign portfolio outflows, is reinforcing India’s macro fundamentals. The research note says the rupee‑denominated asset class now offers appealing risk‑adjusted returns, while the real effective exchange rate has slipped below the 88‑mark, a level usually seen only in severe stress scenarios. This has reduced concerns about rapid rupee depreciation. Credit growth is set to accelerate as economic activity picks up, and the construction sector, particularly cement, stands to benefit from higher demand. Large‑cap equities are flagged as the most attractive investment avenue, with better earnings prospects expected to enhance share performance. While IT‑related stocks appear cheap on a valuation basis, uncertainties remain around their future growth rates. The report also notes that emerging‑market gains are being driven chiefly by technology firms in South Korea and Taiwan, leaving India positioned as a relatively balanced alternative for investors seeking diversification.