Why Investors Should Stay Bullish Despite Global Uncertainty
- Remin Francis I R
- Dec 10, 2025
- 3 min read
In a world marked by economic volatility and geopolitical tensions, it’s easy to get swept up in global uncertainty. However, India’s economic resilience continues to stand out, making it an attractive destination for investors. Despite external challenges, including trade disruptions and rising tariffs, India’s strong domestic demand, robust growth trajectory, and ongoing reforms offer a compelling case for why investors should stay bullish. Let’s take a closer look at the latest insights from the IMF’s 2025 Article IV Consultation and why the future remains bright for Indian markets.
Growth Momentum Remains Strong
India clocked 6.5% GDP growth in FY24-25, followed by a strong 7.8% expansion in Q1 FY25-26. The strength of the domestic market, particularly private consumption, continues to shield India from global volatility. For investors, this means the long-term India growth theme remains compelling, supported by demographics, rising incomes, and policy continuity.
Inflation Under Control
Inflation is expected to average 2.8% this year, remaining well within the RBI’s target band. This gives the RBI room to keep rates supportive, and possibly cut further if required.
For investors, a stable inflation backdrop strengthens the case for:
Equity valuations are staying supported
Bond yields remain attractive
Real estate and consumption-oriented sectors are benefiting from lower borrowing costs.
U.S. Tariffs: A Manageable Headwind
The U.S. has imposed 50% tariffs on key Indian exports, including textiles and jewellery. While painful for specific industries, the IMF notes that the overall economic impact is manageable because India depends more on domestic demand than exports.
For markets, this means:
Limited downside to overall growth,
Some near-term pressure on export-heavy sectors,
Potential opportunities in companies shifting to new markets or domestic-focused growth.
Reforms Continue to Strengthen the Investment Climate
The government’s GST rate simplification, income tax changes, and trade agreement push (such as the UK-India FTA) are expected to improve ease of doing business, reduce compliance burden, and attract more foreign investment.
Investors should keep an eye on:
Consumer-oriented sectors benefiting from GST simplification
Manufacturing, defence, telecom, and insurance, which now have more liberal FDI rules
Public capital expenditure, which remains strong and continues to drive infrastructure opportunities
Financial System Stable and Growing
India’s banks remain well-capitalised, with NPAs at multi-year lows. Credit growth is moderating but healthy. The IMF does highlight rising unsecured personal lending as a risk to watch, but overall stability remains strong.
Financials stay a core holding in Indian portfolios
Select NBFCs remain attractive but require bottom-up risk assessment
Strong bank balance sheets support medium-term loan growth
Long-Term Structural Story Remains Intact
The IMF reiterates that India’s ambition to become an advanced economy is achievable with continued reforms. Over the next decade, the biggest investment themes will likely be driven by:
Infrastructure build-out
Digital and fintech expansion
Manufacturing and supply-chain diversification
Renewable energy and climate investments
Formalisation of the economy
These long-run themes present opportunities across equities, managed portfolios, and direct investments.
Key Risks to Monitor
Global trade tensions and geopolitical shocks
Weather-related disruptions affecting food prices
Volatility in global equity flows
Tariff uncertainty with the U.S.
However, India’s economic fundamentals provide a strong buffer against external shocks.
The IMF’s assessment reinforces the view that India continues to be a high-conviction long-term investment destination. With stable inflation, resilient domestic demand, ongoing reforms, and strong financial systems, India offers both growth and stability in a world where many markets face policy and geopolitical uncertainty.
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