Goldman Sachs: Indian Economy Shielded But Stock Markets Entwined with US

A report by Goldman Sachs indicates that India's economy is shielded from a US slowdown due to low trade dependency, but its stock market shows a strong correlation with the US market. The economic ties are complex, influenced by shared securities markets and trading partnerships.

In a comprehensive report, Goldman Sachs has highlighted India's economic insulation from a potential slowdown in the United States, attributing this resilience to its lower trade dependency. The report underscores that while many global markets have higher trade exposure to the US, India's foreign trade reliance is considerably less.

This economic report indicates that India's GDP is less susceptible to global volatility, despite past exceptions like the 2008 Global Financial Crisis and the COVID-19 pandemic. However, it draws attention to a significant observation—the Indian stock market exhibits a strong correlation with US markets, particularly through indices like the Nifty 50 and S&P 500.

While the Indian markets have mirrored the US market movements, merchandise exports and critical port activities do still feel the impact of US economic shifts. Despite this, India's economic growth faces prospective short-term hurdles, prompting Goldman Sachs to adjust valuation multiples for some companies to better reflect the current challenging operating environment.

(With inputs from agencies.)