Veteran investor Ramesh Damani expects the Indian rupee to appreciate over the next three years, citing its undervaluation on a purchasing power parity (PPP) basis, India's economic resilience and the long-term potential of its equity market.
Speaking at NDTV Profit Ignite, Damani said the rupee could strengthen rather than depreciate over the coming years, while crude oil prices are likely to moderate eventually. He also pointed to attractive valuations across Indian equities, arguing that the recent market correction has created opportunities for long-term investors.
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“India is a great diversified market. We have so many companies and, with such knockdown valuations, they offer great bargains. I think you can make a case over the next three years that the rupee will not depreciate and will start appreciating. The Indian rupee is now cheap on a purchasing power parity basis,” Damani said.
He added that India's diverse corporate landscape offers investors opportunities across sectors, while the country's demographic advantages could become increasingly evident over time.
“I think oil prices will ultimately come down. I think the rupee will not depreciate but appreciate. And India's own demographic strength will start showing through,” he said.
Damani acknowledged that elevated crude oil prices remain a concern for the Indian economy, given the country's dependence on imported energy. However, he argued that higher oil prices would not necessarily translate into a catastrophic economic outcome.
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He suggested that, after adjusting for inflation, India could absorb oil prices above current levels, although geopolitical developments remain a significant source of uncertainty.
For Indian equities, Damani said, the bigger question is whether the global enthusiasm surrounding artificial intelligence (AI) can sustain its current momentum.
Long-Term Investors Should Look Beyond Market Volatility
Highlighting India's long-term wealth creation potential, Damani said the country's equity market has demonstrated remarkable resilience despite numerous economic and geopolitical challenges.
Recalling the Sensex's journey from around 800 to nearly 80,000 over his investing lifetime, he said the benchmark's rise underscored the long-term potential of Indian equities.
“We have been through so much. If you are an investor in the last 30 years, you see the index has gone up 100 times despite many events. The evidence is very clear that you want to be bullish on India,” Damani said.
While acknowledging the possibility of further near-term declines, Damani said the market correction had opened up opportunities across sectors. He urged long-term investors to look beyond short-term volatility and focus on the underlying potential of India's diverse businesses.
His outlook comes amid concerns over global economic uncertainty, elevated crude oil prices and volatility in Indian equities. However, Damani's assessment suggests that India's long-term investment case remains intact, supported by its diverse corporate landscape, demographic strengths and potential for sustained wealth creation.
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