Unique Macro Environment Has Set Stage For Long-Term Growth In India: Emkay Global’s Nirav Sheth

With the recent geopolitical and trade tensions easing, Indian markets are set for long-term growth, said Nirav Sheth, chief executive officer of institutional equities at Emkay Global, on Thursday.

“The decks are stacked up for India. We had a bit of a wobbly situation...because wars are very difficult to pull back from. But we’re back on track. I feel very bullish. The biggest advantage India has right now is the big dollar reset happening globally. It’s very rare to see the United States equity markets rally, bonds go up and the dollar depreciate 10% from the top…all at the same time,” he told NDTV Profit in an interview.

Sheth is confident that this unique macro environment has set the stage for long-term growth in India. “I keep pinching myself that I might be a perpetual fool, but I go by data. Over the last five, 10, 15, 20 years, there's only one period where the US has outperformed India in dollar terms. India has been the best-performing dollar return market across those time frames. That says something. The future looks even better,” the CEO added.

While short-term volatility is inevitable, he said that the historical performance and current trends both favour India. Further, the equity expert emphasised the importance of pro-growth policies to maintain 6.5–7% GDP growth.

“It's important that we have the right policies to ensure the economy continues to hum at around 6.5–7%, with earnings growing at about 12–13%. If that happens, broader markets could ideally double in five to six years,” Sheth noted.

He acknowledged that some sectors may not do as well as others, but he believes a big reset has happened. “In my view, for the first time, monetary policy is aligned with economic reality. We've been running an unusually tight monetary policy....I suspect that rate cuts will be deeper than what markets expect, because we’re now more outcome-focused,” he explained, noting this should impact growth meaningfully.

Sheth said that his focus is on identifying the next big growth stories, particularly in tech and infrastructure. The capital markets expert also added that his team remains cautious of the pharma companies being heavily exposed to the US.

“When I look at the next 20 years, most companies are going to fall into the tech space. Those are the areas you want to focus on. Sometimes valuations are ahead of the story, and sometimes the story hasn’t caught up to the value. For me, these are the focus areas because that’s where the big delta lies, both in terms of earnings and valuations,” he said.