Indian market remains robust, though valuations not cheap: Industry leaders

At the Business Standard BFSI Insight Summit 2025, market experts said India's equity market remains strong and diverse, though valuations are high and real growth lies beyond large-cap stocks

India’s market fundamentals remain strong and diverse despite concerns over stretched valuations, said industry leaders at the Business Standard BFSI Insight Summit 2025 in Mumbai on Friday.

 

Speaking at a panel discussion titled 'Where are the market opportunities – where should investors allocate', Manish Gunwani, head–equities at Bandhan Mutual Fund, said India’s market has reached a balanced stage, though it is far from being undervalued.

 

“We are perfectly in the fair value zone. However, valuations are not cheap. Government debt is at an all-time high,” he said.

 

Gunwani added the real growth opportunities now lie beyond the larger indices. “I am not bullish on large cap earnings. This market is more small cap market. The real growth will be beyond Nifty100 and Nifty200 companies,” he noted.

 

 

‘Health of the market is very robust’

 

Gaurav Misra, head–equity at Mirae Asset, described India’s market as fundamentally strong and diverse. He, however, said the valuations, at an aggregate, may be higher right now.

 

He pointed out that the low inflation environment is shaping a moderate growth outlook. “This year, inflation has been very low. So we're looking at a sub 10 per cent nominal growth,” he said.

 

Highlighting the importance of established sectors, Misra added, “Big entities like automobiles or banks can't be left behind if India is going to become a $5 trillion and $7 trillion economy.”

 

Pramod Gubbi, co-founder of Marcellus Investment Managers, urged investors to remain patient and long-term focused.

 

“Valuations have time-corrected, but not enough,” he said. “Equities is a long-term asset class, you need to be disciplined and stay invested, and focus on fundamentals.”

 

According to Gubbi, the earnings cycle may be nearing a turning point. “We are pretty much at the bottom of the earnings downgrade cycle. Earnings have not recovered dramatically, the expectations have been lowered,” he added.

 

‘India yet to fully participate in global equity rally’

 

Hari Shyamsunder, vice-president and senior client portfolio manager at Franklin Templeton, said India has underperformed compared to the ongoing global equity rally. “There is a global equity bull market happening right now, and we have not participated,” he said. “Our industry's earnings disappointed.”

 

However, he believes that the outlook is improving. “Global equities are rallying, but India’s muted participation stems from last year’s strong run and earnings lag. The good news is the extent of disappointment is narrowing, setting the stage for the next catalyst.”

 

Shyamsunder also pointed to the importance of fundamentals in valuation. “You can create a full valuation framework using growth, return on equity and cost of equity,” he said, adding that “many of the IPOs are not profit making", which calls for more selective investing.

 

While valuations across the Indian market remain elevated, industry experts agreed that the underlying growth story is still intact.