Despite optimism surrounding India’s economic prospects in the coming decade, Subramaniam emphasised the importance of reasonable valuations for equities. He said investors seek valuations that offer a greater margin of comfort.
Many investors view India as a structural component of their portfolios and intend to increase their exposure to Indian equities. However, the challenge lies in reconciling high valuations with investor expectations, the CIO said.
“While there is a desire to increase exposure to Indian equities, investors are cautious about the expensive valuations,” Subramaniam said. Nevertheless, he pointed out, this caution has been mitigated by strong domestic inflows.
Valuations are notably more discomforting within the small and mid-cap space. Given these elevated valuations, this segment of the market must demonstrate significant upside surprises in earnings growth to justify current levels, according to Subramaniam.
