Abu Dhabi-based Lunate, which manages $125 billion, has identified India as a primary long-term investment destination. While the firm acknowledges that Indian stocks currently trade at expensive levels compared to global peers, it believes the country’s internal economic growth offsets external risks. The firm is now favoring a selective, price-conscious approach to investing in the Indian market.
Abu Dhabi investment firm Lunate, which oversees approximately $125 billion in assets, has reaffirmed its commitment to India. The firm views the country as a standout economy that remains largely independent of the cycle-based ups and downs that typically affect other emerging markets.
The core challenge identified by Lunate is the current cost of Indian equities. Indian stocks are currently trading at higher price-to-earnings ratios compared to many of their global counterparts. This means investors are paying more for every rupee of earnings than they might in other markets. Because of these high prices, the firm warns that investors must be very disciplined about the price they pay for a stock to ensure decent long-term returns.
Instead of buying the entire market, Lunate is using a bottom-up strategy. This means they are focusing on picking specific companies with strong business advantages rather than relying on general market growth. This is a shift from the past, where many global funds simply poured money into broad indices. The firm currently holds stakes in the National Stock Exchange of India, ICICI Prudential Asset Management, and Aadhar Housing Finance, alongside investments in climate-focused initiatives like Evren. These choices reflect a strategy of mixing stable financial service businesses with new thematic growth areas.
The firm contrasts India with North Asian markets. While markets in North Asia often rely heavily on semiconductor and technology exports, their earnings can be volatile due to global demand cycles. In contrast, India’s growth is driven more by domestic demand, which Lunate sees as a more stable—albeit currently expensive—opportunity.
For investors, the risk is that high valuations leave less room for error. If corporate profit growth slows down, share prices could face pressure. Therefore, Lunate suggests that long-term success will likely depend on selecting high-quality companies rather than expecting every stock to rise simply because of broad market trends. Investors should focus on tracking whether companies can maintain profit margins and meet growth expectations despite the higher entry costs currently present in the Indian market.