Lombard Odier CIO Viewpoint - India's promised boom

Lombard Odier has released its latest CIO Viewpoint from its Chief Investment Officer, Stéphane Monier, discussing India’s economic outlook in 2023, amid a global drive to diversify supply chains, manufacturing investments and technological infrastructure.

Monier states that India’s economy will benefit from a global drive to diversify supply chains, manufacturing investments and technological infrastructure in 2023. With its population set to surpass China’s in 2023 and growth set to outpace rivals for the foreseeable future, the country’s economic ambitions are increasingly attracting long-term investors’ attention.

Key takeaways:

  • India remains one of the world’s fastest-growing major economies. Lombard Odier sees growth of 6% in 2023 and annually for the next decade.
  • A Western shift in supply chains away from China may benefit India’s economy as it supports domestic production across a range of industries.
  • Inflation was lower than the central bank’s target in November and Lombard Odier expects the Reserve Bank of India’s policy rate to peak at 6.5% in 2023.
  • While corporate earnings are forecast to rise more than 15% in 2023 and 2024, stock valuations are high. High carry yield and an investment grade credit rating of ‘BBB-’ from Standard & Poor’s, mean India’s bonds may see rising levels of foreign interest. At this stage, Lombard Odier prefers shorter-duration Indian sovereign debt, while longer-duration bonds may look more attractive later in 2023.
  • Lombard Odier sees the rupee trading in a range of 80-84 rupees to the USD over the next 12 months.