From The Economic Times · Nishanth Vasudevan · · 2m
India's Market Shift
Amundi's Vincent Mortier says India's equity slump is temporary as valuations improve.
In brief
Amundi's Vincent Mortier says India's equity slump is temporary as valuations improve. Amundi's Vincent Mortier states India's two-year equity weakness is a temporary pause due to improved valuations, urging investors to buy Indian stocks for diversification. Originally reported by The Economic Times.
Market Shift
Vincent Mortier, group chief investment officer of Amundi, says India's two-year equity weakness is a temporary pause as valuations are back to decent levels.
“We went from half-full to half-empty. That's excessive.”
Investment Outlook
Mortier oversees 2.3 trillion of assets worldwide and advises clients to buy Indian equities for diversification.
Narrative Shift
India used to be fashionable due to its prospects and middle class, but now faces energy issues, tariffs, and AI concerns.
Rupee Stability
The Indian rupee remains a question mark with high hedging costs, but fundamentals suggest it won't fall further.
Capital Gains Tax
Foreign investors find India's capital gains tax regime complex, with rules difficult to compute for custodians.
10-Year Yield
India's 10-year yield is almost 7.3%, with inflation around 4.5%, meaning real rates are nearly 3%.
AI Market Concerns
The market is too optimistic, concentrated, and short-term, rewarding all companies despite uneven outcomes.
US Treasury Yields
The US 10-year yield is at 5.25%, with two views: strong economy or excessive financing needs.
US Debt Concerns
The US government has $40 trillion of debt and may need quantitative easing to fund it.
French Bonds
French bond spreads to Germany touched 152 basis points, with elections in May next year.
Asian Markets
Indonesia has strong fundamentals, China offers opportunities at attractive valuations, Japan is expensive and volatile.
Gold as Hedge
Gold provides a hedge against currency debasement but not against geopolitics or inflation.
Investor Advice
Build a core portfolio generating quality income from government bonds or stable, high-dividend equities.
Market Rebalancing
Asset allocations are unbalanced; AI repricing and market corrections may trigger rebalancing.
Long-Term Strategy
Real rates of 3% in India are a good deal; 10-year yield may decline to 7% or 6% before equities take over.
What Happens Next
Foreign investors may return to India as valuations improve and catalysts like geopolitical stability emerge.
What it means
Amundi's Vincent Mortier states India's two-year equity weakness is a temporary pause due to improved valuations, urging investors to buy Indian stocks for diversification.
