According to The Economic Times, Harsha Upadhyaya, Chief Investment Officer – Equity and President at Kotak AMC, has identified a challenging global environment for Indian equities. The Iran-US conflict has resurged contrary to expectations, yields are rising globally, and markets that rode the AI wave higher are now unwinding some of those gains. Upadhyaya noted that everything is coming together and it is not great support for Indian markets. India's limited participation in the AI-led tech rally may cushion it somewhat from a one-to-one correction if US tech sells off sharply. With West Asia tensions flaring again, US inflation at a three-year high, and the Fab-7 tech giants starting to crack, the global environment has turned markedly less friendly for Indian equities.
As reported by The Economic Times, Upadhyaya emphasized that from a business perspective, I do not think anything is going to change for IT services even if there is some reversal in the stock market performance of AI stocks. Full-year earnings growth expectations of around 14% are likely to face downgrades as the war continues, potentially settling at lower double digits. At that level, India's relative premium valuation versus other emerging markets makes it a harder sell for foreign investors, even if the picture looks better than it did a few months ago.
According to The Economic Times, Upadhyaya advised taking some money out of metal positions given the very strong short-term performance from most metal names. He acknowledged brighter prospects from the latest PLI round and easing tariff headwinds in textiles, but flagged limited liquidity in the sector as a constraint for institutional-sized positions. On gold-linked equities, he remained relatively calm, noting that recent volatility in bullion has dented sentiment in gold lenders and jewellery names, but is not yet severe enough to threaten lending books or volume growth, provided gold prices stabilise in a reasonable range.
As reported by The Economic Times, Upadhyaya struck a measured tone on FII flows returning to India in a meaningful way. The combination of West Asian tensions, rising US inflation at a three-year high, and the Fab-7 tech giants starting to crack has created a markedly less friendly global environment for Indian equities. This challenging backdrop is expected to impact foreign investor flows, which remain a key watchpoint for market performance.
