Are there any positives for the Indian markets and should I look to buy into Indian stocks at these lower levels?

Broadly, I think there are two things that should favour India at the current valuations. Firstly, the good news is that Nifty valuations are tapering. Look at the premium of the MSCI India P/E ratio to the MSCI EM P/E ratio. That ratio had touched a peak of 75% around December 2019, the highest level since the peak of the 2008. That clearly warranted a correction in the market and that looks to be done and dusted. Now, that premium has come down sharply from 75% to around 50-55%, which is approximately the average that Indian markets have sustained. That creates a valuation case for Indian stocks.

Secondly, the slowdown has helped to turn some of the macros in favour of India. If you look at the latest macros, inflation is down, IIP growth is up and trade data shows better overall trade growth and a lower trade deficit. The price of crude oil falling to $33/bbl entails a huge-wealth shift from the oil producers to the net oil consumers. With India’s ~85% reliance on imports, it should be a direct beneficiary of lower crude prices. Current Account Deficit has fallen to a low of 0.20% and the trade deficit for February has come down to below $10 billion. These could have a major impact on external sovereign ratings of India and largely reduces the vulnerability of the Indian economy.