He said these adjustments mean India’s absolute investment case is largely unchanged from a year ago. But in relative terms, 2026 could matter more as investors look for alternatives to North Asia. “People looking for a refuge for that North Asian allocation… could find its way to India,” he said, noting the significant divestment over the past year.
Also Read | India back on foreign investors’ radar, says UBS’ Mickey DoshiRedman expects progress on the India–US tariff deal. He said tariff levels under the Trump administration typically began high and then eased. “I would imagine that the tariff rate on India will compress beyond 25,” he said. He added the aggressive tariff move earlier this year “caught us by surprise,” but the pattern suggests it will unwind through next year.
Redman also discussed concerns around a potential AI bubble. He pointed to stretched valuation metrics in the US. “US price-to-sales is now at 3.5 times… that has eclipsed the internet bubble,” he said. He noted S&P 500 earnings forecasts—10% growth last year, 12% this year, and 14% for 2026–27—are well above the long-term trend of about 7%. This creates what he called the “largest deviation above trend earnings since 2008.”
He said the key risk is whether the current pace of US technology capex can continue. Hyper-scalers have deployed about $360 billion over the past 12 months, with capex-to-sales near 22%. Market concerns, he said, include circular financing, the depreciation of GPU assets and the risk of commoditisation.Also Read | CLSA expects two RBI rate cuts by February as inflation cools
On broader US risks, Redman said the Federal Reserve now appears more focused on the labour market than inflation. He expects US payroll data to turn negative. “US month-on-month payroll changes are going to go negative,” he said, citing private-sector indicators. Inflation, however, remains above comfort levels, with household expectations in the 4–4.5% range.
He said some pockets of the US consumer are showing credit stress, including credit card and auto loan delinquencies. But mortgage delinquencies remain low because many borrowers locked in low 30-year rates. Household balance sheets, he said, look more stable than before the global financial crisis.
Redman flagged the US government balance sheet as a larger concern, with debt-to-GDP projected to approach 120% over the next decade and interest costs taking up a rising share of revenues. He said this is “one of the reasons why Trump is so keen for the Federal Reserve to cut rates.”
For the full interview, watch the accompanying video
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