Citi prefers India among emerging markets, sees US as fairly valued

India stands out among emerging markets due to its resilient economy and strong fundamentals, according to Drew Pettit, Director of US Equity Strategy and ETF Research at Citi.Following Citi’s global strategist framework, Pettit pointed out that India ranks highest among emerging market preferences. “It is relatively insulated from trade, and you have a relatively good quality market. Outside of that we are talking about names like South Africa, Chile and Poland, who are all seeing inflections in EPS in relatively solid earnings and fundamental growth there,” he added.

On developed markets, Pettit maintained a neutral stance on the US, noting that while the underlying fundamentals remain strong, much of the positive outlook is already factored into valuations. “If investors are seeking exposure to long-term growth and secular trends, the US still makes sense,” he observed.

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Europe, meanwhile, appears more attractive to Citi on account of stabilising earnings and lower relative valuations. Japan was also highlighted for its industrial strength and earnings momentum, which began even before recent trade friction intensified.Despite escalating geopolitical risks globally, Pettit noted that markets have largely remained unfazed. However, he cautioned that commodity movements—especially oil—deserve close monitoring.

“Right now, oil is the main macro driver we are tracking,” he explained. Brent crude has rebounded significantly from last week’s levels, though still remains moderate by historical standards. “A sustained rise in oil and commodity prices would translate into higher input costs for businesses, especially in the US. That’s when equity markets could begin to feel the pressure,” he said.

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