Expert view: Indian stock market inherently strong to sustain gains; look beyond immediate triggers
Rahul Singh, CIO-Equities at Tata Asset Management, believes the Indian market has inherent strengths that could sustain gains and hence, investors should look beyond immediate triggers. In an interview with Mint, Singh also shared his views on FII and DII trends and different sectors. India’s GDP growth rate has gone past China’s after many decades.
The investment cycle is recovering, the private capex and real estate cycles have improved, and the banking sector is robust. These trends differ from what we are witnessing in developed and other emerging markets. The potential for India to emerge as one of the important manufacturing hubs with the changed geopolitical landscape post-Covid and post-Ukraine has added an option value to India’s equity valuations.
This, coupled with under-control fiscal and stable external account, has led to a 70-75 per cent valuation premium in India’s PE ratio relative to other emerging markets. So, while many of these positives are already reflected in current valuations, the Indian market possesses inherent strengths that could sustain these gains. Investors should remain engaged, looking beyond immediate triggers and focusing on sectors potentially benefiting from structural reforms and government initiatives.
The contrast in FII and DII investment trends is influenced by differing economic indicators and interest rate environments globally. While FIIs have been cautious, influenced by their respective domestic economic concerns and high interest rates globally, DIIs continue to invest due to buoyant economic outlook and tax differential versus debt. To attract more foreign capital, India needs to continue enhancing its ease of doing business, alongside maintaining a stable fiscal and
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