New Delhi, Nov. 24 -- India's economy is gaining momentum even as the global environment remains unsettled, the Reserve Bank of India (RBI) said in its latest State of the Economy report released on Monday.

After more than a year of rising uncertainty across global markets, October saw a mild retreat in volatility, the central bank said in the monthly report. It, however, cautioned that surging equity valuations abroad may be "outpacing fundamentals", and could eventually threaten financial stability.

"Global uncertainty remains elevated, although October witnessed a slight pullback after more than a year of continuous increase," the RBI said in the State of the Economy report, which is a part of its November bulletin.

It added that co...