Earnings Recovery and Attractive Valuations Boost India’s Equity Outlook Amid FII  Caution: Siddharth Vora 

The Indian equity markets are gradually transitioning into a more promising phase after  several months of limited movement. This shift is backed by improving  earnings visibility, stable macroeconomic conditions, and relatively appealing  valuations. Siddharth Vora, Executive Director at PL Asset Management, asserts that  these elements collectively position India as a robust investment destination, even in  light of the current cautious approach from foreign investors. 

In an interview with ET Now, Vora emphasized that the recent market uptrend should  not be dismissed as mere year-end enthusiasm. Instead, it signifies a broader  alignment of positive economic and market indicators. “India is well-positioned for a  constructive growth cycle. Economic growth remains strong in a low inflation environment, and both monetary and fiscal policies are supportive. From a  data perspective, risk appetite hit its lowest point around February and has  been steadily improving since then,” he remarked. 

Earnings Upgrade Cycle Gaining Traction 

Vora noted that market volatility is currently low and investor anxiety has subsided,  indicating healthier market conditions. He observed that the period of  earnings downgrades seems to be largely behind us, with Indian corporates now  entering a phase of earnings upgrades. “Crude oil dynamics are favourable, and 

India’s valuation compared to other emerging markets, developed markets, and even  alternative assets like gold and silver is nearing cyclical lows,” he added. 

India Shines as Global AI and Crypto Trades Cool Off 

Discussing India’s position in the global investment landscape, Vora pointed out that  the country did not partake in the sharp rallies associated with artificial intelligence and  cryptocurrency assets. “As these trades unwind globally, India stands out as a neutral  and attractive option for investors seeking both stability and growth,” he explained. 

Regarding foreign institutional investor (FII) flows, Vora acknowledged that overseas  buying is currently limited. However, he credited strong domestic institutional and retail  participation for maintaining resilience in Indian markets. “It’s not a matter of if,  but rather when foreign investors will return. India’s macro stability, improving earnings  outlook, and structural growth narrative make it a compelling long-term investment,” he  stated. 

Risks Persist, But Are Likely to Diminish Over Time 

In the short term, Vora highlighted certain risks, including the unwinding of the Japanese  yen carry trade, pressure on the rupee, and delays in global trade agreements. Over the  long haul, the lack of a direct artificial intelligence-led growth theme in India could  dampen foreign investor interest. “These risks are present, but they are not permanent  and are likely to be addressed over time,” he noted. 

Preference for Large Caps and Value-Oriented Sectors 

From a portfolio allocation standpoint, Vora mentioned that PL Asset Management  currently favours large caps and mid caps, with small caps comprising less than 15% of  the portfolio. “Small caps have lagged in earnings growth, and their valuations are not  particularly attractive. We feel more comfortable with large caps and mid caps, where  earnings visibility and valuation comfort are more promising,” he said. 

The firm’s portfolio remains focused on value, with a cyclical inclination towards sectors  such as financials, materials, metals, energy, and commodities. “Our investment  strategy evolves with market cycles. Currently, value and cyclical sectors provide  a better risk-reward balance,” Vora added. 

In summary, while short-term volatility cannot be overlooked, Vora is optimistic about  the long-term fundamentals for Indian equities, which are bolstered by macroeconomic  stability, improving earnings momentum, and sustained domestic liquidity.