The US economy is seeing the hottest inflation in four decades with a reading of 8.3 percent for the month of August. Market watchers now believe that the US Fed will raise lending rates by another 75 bps in the next policy with Fed Chair Jerome Powell already admitting that these hikes might cause "some pain".

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However, according to Adrian Mowat, veteran emerging equity markets strategist, the inflation pain points should start subsiding from next year.

"My sense is that we are developing a little bit of a scar tissue to these inflation prints and that the market probably is going to become more focused on the economic weakness as you go into 2023 rather than inflation and that is going to be very important for the rotation in the market,” he said.

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Mowat also believes that India looks like the best place to be from an international perspective.

The Indian markets have had a stellar run from their recent lows in June, with the Nifty 50 index gaining nearly 3,000 points and the S&P BSE Sensex surging over 10,000 points during the period since then.

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“Within the EM space, India looks like the best place to be for international investors. And domestically, what I hear from my contacts in India is an economy that actually feels very robust, a sense of resilience, a sense of an economy that is really pushed well beyond the pandemic and so the fears around earnings in India are probably low relative to what we see in markets such as the US, Europe and China,” he said.

(Edited by : Abhishek Jha)