We discuss India’s current economic position and how it fits into the broader context of global economic cycles using a Four Quadrant framework. We believe that India is currently in an inflationary boom, as both prices and economic activity are increasing – alongside a global environment where we are not likely to see Central Banks cut rates. This is different from the disinflationary boom environment the US experienced between 2010 and 2020, during which interest rates dropped.

While in an inflationary environment, it is difficult to pre-position a portfolio – we look for cues to construct our portfolio by superimposing the above, alongside what sectors have done well and what we expect to do well in respective environments. The economy today is experiencing strong GDP growth, which is reflected in valuations and market capitalization reasonably well.