- India remains one of the fastest-growing major economies despite global uncertainties, said Freeman
- Recent Indian equity underperformance is due to global events, not due to fundamentals, he added
- Foreign investors have withdrawn funds, but domestic investors are cushioning the impact, he said
Despite geopolitical tensions in the Middle East, persistent uncertainty around artificial intelligence spending and continued foreign investor outflows, India is expected to remain one of the world's fastest-growing major economies, according to Seth R Freeman, Senior Managing Director at GlassRatner Advisory & Capital Group.
Speaking to NDTV Profit, Freeman said the recent underperformance in Indian equities should be viewed in the context of extraordinary global developments rather than any deterioration in the country's economic fundamentals.
"There is a lot of volatility caused by the war and AI-related investments are soaking up global liquidity," Freeman said. "But the irony is that India still has a high growth rate and is expected to continue having a high growth rate."
Freeman noted that while foreign institutional investors (FIIs) have pulled money out of Indian markets this year, domestic investors have helped cushion the impact. He added that once valuations become attractive enough, overseas capital is likely to return.
On sectoral preferences, Freeman remains constructive on healthcare and automobiles, saying both industries are well positioned for long-term growth.
His optimism comes even as global markets grapple with multiple risks. The ongoing conflict involving the United States and Iran continues to create uncertainty around oil markets and shipping routes through the Strait of Hormuz. Freeman expects periodic flare-ups rather than a quick resolution, warning that investors should prepare for "quite a bit of back and forth" between the two countries.
Beyond geopolitics, he believes artificial intelligence remains another major theme shaping global capital flows. Massive investments are currently being made in AI infrastructure, data centres and semiconductor manufacturing, but Freeman cautioned that returns on those investments could take several years to materialise.
He also dismissed concerns that the recent correction in semiconductor stocks reflects a structural downturn. Instead, he attributed it to elevated valuations and persistent supply constraints.
"There is still a global shortage of semiconductor chips," he said, adding that building new manufacturing capacity takes considerable time and investment.
Freeman also highlighted another inflationary risk that markets may be underestimating. Supply disruptions linked to the conflict could reduce the availability of fertilisers, potentially driving food prices higher globally.
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