The Indian market has outperformed its global peers, especially emerging markets, during its recent bull run. However, market veterans are worried about the high valuations and high premiums currently being seen and believe there could be a cooling off period around the corner.
Manishi Raychaudhuri, Asian Equity Strategist-Equity Cash for Asia-Pacific at BNP Paribas, believes that the kind of premium we are currently seeing versus emerging markets (EM) or Asian peers is a bit of a concern in the near term. .
"So it may be that the Indian market is taking a break. We could see some sort of short-term weather correction," he said.
Inflows from foreign players have increased in recent weeks, with August seeing a turnaround where foreign institutional investors emerged as net buyers of Indian stocks after a 10-month gap.
In an interview with CNBC-TV18 yesterday, Jefferies India strategist Mahesh Nandurkar, India echoed a similar thought saying that India currently benefits from the "there is no alternative" factor.
Raychaudhuri, over a longer period, continues to remain positive on Indian equities. "So longer term, we are still not moving from our overweight position in India," he said.
India has benefited from China's zero COVID policy, but there is also fundamental impetus for the markets to rise.
"We've seen India pull back very sharply in terms of post-COVID economic growth. We've seen the earnings estimates of some of the key sectors like finance, some of the private sector banks that they left late on" , Raychaudhuri explained.
For the full interview, watch the attached video
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