Indian equities are caught between strong domestic macroeconomic fundamentals and relatively rich valuations, leaving broader markets less attractive even after recent price adjustments, according to Sandeep Bhatia, Managing Director and Head of Equity India at Macquarie. Bhatia noted that a sharp global sell-off could act as a catalyst to drive foreign capital back into India, as international investors seek out fundamental stability during bouts of worldwide risk aversion.
Speaking to NDTV Profit on Wednesday, Sept. 9, Bhatia outlined a cautious near-term outlook for headline indices, observing that large-cap equities may struggle to deliver robust performance in the coming quarter. Instead, investor activity has pivoted sharply toward primary market offerings, pulling attention and liquidity away from the secondary market.
While recent market corrections mean Indian stocks "have become cheaper for a change," Bhatia highlighted that equities remain expensive relative to global peers. "There is not much difference between emerging markets and developed markets right now. India has remained more expensive than other markets, and while the macros are resilient, the market as a whole is not particularly attractive at current levels."
Sectoral Dynamics: IT And AI Gap
Discussing sectoral opportunities, Bhatia pointed to information technology as an emerging pocket of value, though he stopped short of turning outright bullish. Analysts have a divergent consensus as broad market sentiment around the IT space remains largely unenthusiastic, keeping consensus expectations muted. Bhatia highlighted that Asian and global allocators remain heavily focused on direct plays in hardware, semiconductor, and generative AI ecosystems.
India lacks a comparable listed AI universe, making regional alternatives in East Asia more compelling for tech-focused global flows. He added that mid- and small-caps have outperformed. Outside large-caps, mid- and small-cap segments appear comparatively favorable at the moment, driven by targeted domestic themes rather than broad-based index momentum.
Geopolitical Pressures And Commodity Watch
Geopolitical conflicts continue to inject volatility into financial assets worldwide. Bhatia warned that war-induced anxieties have rippled across international markets, making collateral impact and systemic leakages inevitable for equities everywhere.
On the commodities front, Macquarie is maintaining a strict "wait-and-watch" stance regarding crude oil prices. Escalating geopolitical tensions pose an ever-present risk of crude price spikes, a critical external vulnerability that Indian markets and monetary policy watchers must continue to monitor closely.
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