Indian equity markets present long‑term opportunity despite near‑term lag: Report
New Delhi, Aug 6
Indian equities have lagged global peers in the near term but could emerge as a compelling long‑term investment case as foreign flows rotate back, a report said on Thursday.
The report from Abakkus Investment Managers forecasted that India is expected to gain from AI trade reversal in the medium to long term.
It added that foreign institutional investors who recently booked profits in South Korea may redeploy capital into India over the next six to 12 months in AI‑led trade reversals.
The firm said India's underperformance is largely sentiment and valuation driven rather than a reflection of macroeconomic fundamentals.
"India's economic fundamentals remain strong with robust growth, healthy forex reserves, improving domestic demand, and policy continuity. However, global investors have shifted capital toward AI-led markets such as the US, Taiwan, and South Korea," the report said.
The firm pointed out that Indian equities have lagged global peers in the near term as India's Nifty 50 TRI returned negative 0.4 per cent through one year till June 30, 2026, while South Korea's Kospi returned 103.2 per cent and Taiwan's TAIEX 83.2 per cent.
Meanwhile, Japan's Nikkei delivered 56.7 per cent and the United States' Nasdaq provided 20.1 per cent returns. However, in the one-month period, India's Nifty 50 TRI made a positive return of 2.4 per cent, whereas South Korea's Kospi registered negative return of 22.2 per cent.
"India's long-term investment case remains firmly intact. While global capital flows are currently being influenced by evolving technology-led opportunities, geopolitical developments and currency movements, the country's underlying growth drivers including demographics, consumption, formalization and infrastructure creation continue to strengthen," said Aman Chowhan, Head of Equities - Alternates, Abakkus Investment Managers Private Limited.
Periods of market underperformance often create the foundation for future opportunities, Chowhan added.
The firm also pointed to structural strengths that support a case for rupee recovery, including moderating dollar outflows as dependence on imported energy is gradually reducing.
Reserve Bank of India initiatives such as FCNR schemes also bolster foreign currency inflows and external liquidity supporting rupee. India's sectors are more evenly distributed, reducing dependence on any single sector and supporting diversified market exposure, the report noted.
— IANS
Reader Comments
Responsible citizens should keep a diversified portfolio. A report like this is informative for financial planning, but investors must consult their advisors. It's wise to stay informed about market movements while focusing on long-term fundamentals. 📊
The Korean market dropping 22% in one month while India is positive shows who's the stable horse in the race. Foreign investors will eventually come back to quality over hype. AI bubble will burst, and India will be their safe landing spot.
This report echoes what many Indian retail investors have been feeling - our market is undervalued right now. The rupee recovery angle and RBI's FCNR initiatives show the government is proactive. Being patient is key, and our fundamentals are rock solid. 🇮🇳
Interesting analysis. The comparison with Korean markets is particularly telling - their AI-driven rally seems to be cooling off. India's diverse sectoral distribution and strong domestic consumption make it a solid choice for any global portfolio. Need to look at broader economic trends rather than short-term movements.
I appreciate the technical perspective here, but let's not celebrate too early. The underperformance is real and FIIs aren't coming back just because of a report. We need stronger policy measures to attract foreign capital. Market recovery requires more concrete steps than just sentiment analysis.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.