According to Matt Orton, Chief Market Strategist at Raymond James Investment, India is well positioned to benefit as global investors diversify beyond US technology and semiconductor stocks. As reported by CNBC TV18, Orton believes India's low correlation with US markets and improving foreign inflows make it an attractive market, provided crude oil prices remain under control. The correlation between MSCI India and MSCI US has been around 0.1 or even lower over the past year, with Indian companies having very different drivers from US and broader emerging market stocks. Speaking to NDTV Profit, Orton noted that geopolitical tensions may continue to cloud market sentiment, but they are unlikely to derail India's longer-term investment story. He expects the next leg of foreign buying to depend less on geopolitical headlines and more on the corporate earnings season.
Orton continues to favour ICICI Bank among financials, as reported by CNBC TV18. He also sees DLF as an attractive real asset play in India, which has been an outperformer. For power sector exposure, Orton believes NTPC offers compelling value after its recent correction, backed by strong fundamentals, earnings momentum and attractive valuations. As reported by NDTV Profit, his preferred stock ideas include Adani Ports & Special Economic Zone, DLF and NTPC. "I would continue to use downside opportunistically in financials," he said, while DLF is an area he's been looking at much more closely. "NTPC looks attractive on dips."
According to CNBC TV18, foreign institutional investors (FIIs) have become buyers again after Indian markets underperformed for the past 18 to 24 months. Orton believes the pieces are coming together for India to outperform, provided crude oil prices remain under control. Speaking to NDTV Profit, Orton said foreign institutional investor (FII) inflows could remain uneven in the near term as investors seek greater clarity on the rupee and global macroeconomic conditions. "It's been very encouraging to see investor activity come back to India," Orton said. "Until we have clarity with respect to where the currency's going to go, I think FII flows will be challenged." He expects the next leg of foreign buying to depend on corporate earnings season showing that consumption hasn't degraded, especially from banks.
As reported by CNBC TV18, India fits very well as a value play where fundamentals remain positive, assuming oil prices don't surge. Valuations have become reasonable enough for investors to be comfortable. Along with India, Orton also likes the United Kingdom with its old-economy businesses and Japan as the three pillars for international diversification. Investors looking to diversify away from heavily overweight semiconductors and growth stocks need markets that help reduce portfolio correlation, especially when stocks and bonds are moving together. Speaking to NDTV Profit, Orton cautioned investors against overreacting to the latest flare-up in West Asia, saying markets have become more resilient to geopolitical shocks. "Every time we think we're through this, it just starts again," he said. Rather than trying to predict geopolitical outcomes, investors should focus on "idiosyncratic stories" where earnings are driven by company-specific factors.
On the macro front, Orton expects policymakers to stay alert to inflation risks but does not foresee crude oil returning to the triple-digit levels seen in previous energy shocks. As reported by NDTV Profit, instead, he believes the bigger question is whether higher energy costs spill over into sticky services inflation. The analyst continues to favour financials on market weakness and sees opportunities in real assets, with India's earnings outlook and relative valuations continuing to make it an attractive market despite near-term currency and geopolitical uncertainties.
