Tailwind reducing, headwind rising: Risks emerging for economy, markets

India's exports are not growing fast enough, while its import bill continues to rise, thanks to rising crude oil prices and consumer goods imports

The emergence of new macroeconomic headwinds can put cold water on the hopes of a faster recovery in India’s economic and corporate earnings growth. The economic stability of last three years, albeit amidst low growth, was aided by a confluence of favourable factors such as record low crude oil prices, soft bond yields (read interest rates) and ample global liquidity. This translated into low current account deficit (CAD) and fiscal deficit, thereby adding to the favourable macroeconomic environment.
 
All these factors provided wings to Dalal Street bulls and consequently, stock valuations soared even as the underlying corporate earnings growth