According to Shailendra Kumar, Chief Investment Officer at Narnolia Financial Services, the recent recovery in Indian equities is still some distance away from establishing a sustained risk-on trend.
Indian markets have significantly underperformed most major global indices over the past two years. While valuations had climbed towards the upper end of their historical range in 2024, they have since corrected meaningfully and are now closer to the lower end of that range, he said in an interview with Moneycontrol.
Kumar believes a sustained revival in foreign institutional investor (FII) flows into India will depend on domestic companies regaining their relative earnings-growth advantage. As corporate earnings growth improves relative to other global markets, India is likely to reclaim a larger share of global investor allocations, he said.
Do you expect the risk-on trade to continue, given the significant recovery in equity markets since last week?
The recent pullback in Indian equities is still some distance away from establishing a sustained risk-on trend. Indian markets have significantly underperformed most major global indices over the past two years. While valuations had moved towards the upper end of their historical range in 2024, they have since corrected meaningfully and are now closer to the lower end of that range.