Neeraj Seth, former CIO & Head of APAC Fundamental Fixed Income at Blackrock said that the heavy selling of Indian stocks by foreign institutional investors (FII outflows) might be slowing down.”I think we’ve seen a majority of it. But are we done? I’m not sure,” he said.
This is because a large chunk of the expected outflows, driven by high valuations, US policy uncertainty, and the pull of recovering Chinese markets, has likely already occurred.
“I do believe India looks very attractive on the debt side,” he said, adding that the stability of Indian government bonds and their favourable returns, even though they are currently underinvested by global investors.He is positive about India’s currency, bonds, and overall credit markets in the medium to long term, citing the country’s move towards lower inflation.
Seth does not believe US exceptionalism is over, but there’s certainly a pause. He argued that while the US remains strong, market valuations have become excessive, leading to a necessary correction.Also Read | US recession fear: Trump tariffs cap the cheer from easing inflationMeanwhile, Louis Kuijs, Chief Economist Asia-Pacific at S&P Global Ratings, provided insights into the uncertainties surrounding US trade policies. He said, “I’m not sure anybody of us knows exactly what they’re planning in terms of timing, and not even exactly what they’re doing.” This highlights the difficulty in predicting the impact of upcoming US tariff decisions.Despite the potential for increased US tariffs, Kuijs believes that India’s economic growth should remain relatively unaffected. He pointed out that while India could face tariffs, its exports to the US are not a dominant part of its economy. Therefore, any impact on India’s growth is likely to be limited. He stated that “India may well face some tariffs, but exports to the US are not a huge size compared to India’s economy”.Also Read | Fed may hold rates, hint at deeper 2025 cuts: CitiKuijs also observed a shift in market sentiment towards China. He stated, “I think markets probably have been too gloomy on China and are having another look at it.”For the entire interview, watch the accompanying videoCatch all the latest updates from the stock market here
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