Timothy Moe, the chief Asia Pacific equity strategist at Goldman Sachs, believes that it will be tough for India to outperform global peers in 2023 as valuations of Indian stocks remain elevated amid rising interest rate hikes by the central bank.
While Moe maintains that the 'worst of inflation' could be over, he expects two more 25-basis-point rate hikes from the Reserve Bank of India (RBI). The RBI monetary policy committee hiked the repo rate by 35 basis points to 6.25 percent on December 7.
"So we think there still needs to be further tightening of monetary policy in order to make sure that inflation continues to subside," he said in an interview with CNBC TV18.
Also read: RBI Monetary Policy News Highlights
Meanwhile, Moe continues to remain optimistic about the Indian markets' prospects in terms of growth and earnings, in comparison to other markets in the region.
"The longer-term strategic prospects for India and for the Indian stock market are actually among the best, if not the best in Asia," he added.
"There will be a strong recovery in 2024 but the compound growth will certainly be somewhat lower than we were expecting for India."
Also read: Three IPOs worth over Rs 1,800 crore to keep Dalal Street on the boil next week
Talking about China, Mark Matthews, managing director at Julius Baer, said that reopening the economy will be beneficial for China but may put pressure on the Indian markets.
"Some of the other markets that got beaten up badly this year, like Korea and Taiwan, will outperform India next year because of China reopening and also because we'll probably hit cyclical bottom in the world economy some time next summer", he said in an interview with CNBC TV18.
Matthews says he favors the Indian economy as it is a pro-capitalist and pro-business economy, unlike China, which has been the opposite in recent years.
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