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Macroeconomic headwinds have impacted capital inflows globally and in India as well. Access to traditional sources of capital has tightened, inflation has largely been near the higher end of the Reserve Bank of India’s (RBI’s) target range and interest rates have been raised by 250 basis points, in line with global trends. Rising interest rates have created cash flow pressure for companies with a focus on debt repayment, and increased borrowing costs.
The BSE 100 is at an all-time high due to increased fund flows into the Indian equity market. Inflows to Indian equity mutual funds jumped 31 per cent sequentially to $2.5 billion in March 2023 buoyed by strong retail participation. However, public market premiums in valuations don’t necessarily