Whalesbook
Nomura's Asia-Pacific Equity Strategist Chetan Seth has moved his rating on Indian equities to neutral. He now expects India's stock market to perform in line with regional peers, rather than outperform.
Seth pointed to two key global factors influencing India's market: the direction of oil prices, which are sensitive to geopolitical events, and the artificial intelligence (AI) technology cycle.
He explained that while easing geopolitical tensions could boost Asian stocks, India's potential to lead such a rally depends on both energy markets stabilizing and the AI tech sector flourishing at the same time.
Stronger Bets in Asia
In contrast, Seth sees stronger potential in markets like South Korea and Taiwan. Korea's appeal is boosted by strong earnings growth forecasts, projected at 150% for 2026. Recent results from companies like Samsung Electronics have exceeded expectations, and valuations at 7-8 times earnings are seen as attractive.
Taiwan, he added, is even more heavily exposed to the AI theme, with 80-85% of its market linked to technology.
Investor Flows and the Rupee
Seth also discussed significant foreign investor outflows from India, totaling $16-17 billion so far this year. These flows could reverse if global stability returns and investor sentiment improves, with ample capital ready to be reinvested in emerging markets.
However, the stability of the Indian rupee is also crucial, as it often faces pressure during persistent outflows.