India is in a Goldilocks situation with strong gross domestic product (GDP) data for Q4FY23 and a cool-off in inflation despite economic tailwinds globally, Nilesh Shah, chief executive officer of Envision Capital told .In a Goldilocks situation, the economy is not expanding by a huge margin with inflation or shrinking into recession. Such a scenario is said to be good for investors as companies perform well and stocks rally.The Indian economy grew 6.1 percent in the January-March quarter (Q4) of FY23 to Rs 43.6 lakh crore that took the growth rate for 2022-23 to 7.2 percent, or Rs 160.06 lakh crore — a notch higher than both Reserve Bank of India (RBI) and private projections.”If we see (interest) rates coming down, that will be a big booster,” Shah said, adding that October would be a good time to expect the RBI to start cutting rates. The RBI kept the repo rate unchanged at 6.5 percent earlier in February.Meanwhile, he reiterated that India needs to be watchful of US Federal Reserve’s decision on interest rates, stating that if the Fed’s stance is not that of an accelerated hike, then the situation in India should be fine.Talking about variables to be watched out for over the next few weeks, Shah mentioned Fed’s decision & upcoming monsoon. “Hopefully monsoon should not be a challenge,” he stated.On his stock picks, he expects auto components, travel and hospitality to do well, adding that discretionary spending should also continue to do well. “India will be able to take global macro headwinds in its stride,” he believes.He is of the view that IT continues to be a ‘very interesting space’ and said there is still some way to go before the large-cap IT stocks trend lower and become attractive. Meanwhile, large-cap IT still has some downside as their guidance talks about low-mid single-digit kind of growth, he added.”Mid- and small-cap IT look very interesting,” he said, suggesting that select mid-cap and small-cap IT stocks are poised to grow in double digits and their valuations are still reasonable.Shah said the combination of rate sensitives, discretionary spending, and investment-related sectors will continue to be his favourite themes.