The Reserve Bank of India's (RBI) Financial Stability Report indicates India's economy remains strong with robust domestic demand, despite facing near-term risks from external uncertainties like geopolitical tensions and trade disputes. These global factors could increase exchange rate volatility, impact trade, reduce corporate earnings, and dampen foreign investment. While the domestic financial system, including banks and NBFCs, is well-capitalized and resilient, a sharp correction in global markets, particularly US equities, could spill over and tighten domestic financial conditions.