According to Zhito Finance APP, Invesco’s market strategist for the Asia-Pacific region (excluding Japan), Zhao Yaoting, wrote that since the outbreak of the pandemic, the Indian stock market has been in a sustained bull market. However, affected by cyclical slowdowns, the stock market fell about 9% from historical highs last month, followed by a rebound. The recent decline may be a good opportunity to "buy on the dip" and seize some Indian stocks.

As of the quarter ending in November, India's GDP has slowed, with a real year-on-year growth of 5.4%, far below expectations (estimated at 6.5%, with last quarter at 6.7%). Zhao Yaoting believes that the current economic slowdown and some negative news related to India's largest conglomerates may be reasons for the outflow of foreign investment. However, the Indian stock market still shows resilience, with domestic inflows from mutual funds offsetting about half of the foreign outflows.

Zhao Yaoting stated that the current slowdown should be cyclical, a normal phenomenon that occurs in almost every major economy. Manufacturing and domestic consumption growth have weakened sequentially, but seasonal factors this quarter and the next are expected to improve data. Private consumption accounts for about 60% of India's GDP, which means that to achieve a recovery, Indian consumers need to "take out their wallets." Signs of recovery have already been observed. The festive season has begun, extreme weather has ended, and combined with agricultural production growth in the last quarter, this is expected to boost rural consumption.

Moreover, the contentious elections have ended, and the Indian government is focused on getting growth back on track, with infrastructure stimulus expected to be expanded in the coming months. The boost in domestic demand, along with increased government spending and forthcoming rate cuts by the Reserve Bank of India, may stimulate private sector spending growth and attract the attention of foreign investors.

He emphasized that given the high inflation, the Reserve Bank of India will keep the policy rate unchanged at the December meeting. The current cyclical slowdown in the domestic economy will undoubtedly benefit from rate cuts by the Reserve Bank of India. Invesco will closely monitor any legal developments between the US Department of Justice and Indian corporate entities. So far, local investors have basically shrugged off the effects of related events, and the risk of scandals spreading is low.

He believes that despite investors possibly perceiving India's macroeconomy as declining for various reasons, the economy and the market have not exited. Stimulated by Indian government investment and improvement in domestic consumption, growth is expected to accelerate in the coming quarters. The negative factors facing the market and economy are receding, which may present an opportunity for foreign investors who have been sidelining the high valuations of Indian stocks to "buy on the dip" and seize some Indian stocks. Additionally, December has traditionally been bullish for the Indian stock market; over the past 30 years, the Nifty Index has recorded an increase nearly three-quarters of the time, with an average rise of 3% compared to the previous month.