High valuations could put the brakes on the 2023 boom in Indian equities.

 

As sky-high valuations dampen on market enthusiasm, Indian stocks, which provided a haven from losses that beset global equity investors in 2022, appear destined to lose momentum next year.

This is the general agreement among experts and strategists, who also anticipate that the rupee would perform worse than other emerging-market currencies in general and that the nation's bonds will gain from its inclusion in important global indices.

According to Hiren Dasani, managing director at Goldman Sachs Asset Management, "6-12 months may see some of these markets that have become oversold do better than India since India has outperformed so much in the last 18 months" if there is a recovery in global GDP and sentiment. However, India will perform far better over the longer run due to the chance for compounding growth.

India has been an exceptional market this year, with the NSE Nifty 50 Index up over 7% in contrast to an 18% decline in world stocks, but it continues to be the most expensive in Asia. According to strategists at Goldman Sachs Group Inc., India's equities market performance would probably fall behind China and Korea in 2019.