Despite the strong macro headwinds, the stock market has been reasonably stable, supported mainly by domestic investment. Since the market valuations are fair now, a sharp correction appears unlikely.
If crude prices remain elevated for an extended period, trade and CAD will further widen, impacting the rupee more. The rupee might depreciate to 100, and trigger more FPI outflows.
From the growth perspective, the governor's comment that " growth impulses remain strong, supported by robust private consumption and sustained investment demand" is significant and reassuring
