2 weeks Ago By Neha Aravind
India is no longer an emerging market, but has already "emerged," says Vikas Pershad, portfolio manager at M&G Investments. While the debate on whether the US or emerging markets will dominate global equity returns in 2025 continues, Pershad believes both India and the US will remain key drivers of equity performance over the next three to five years. He noted that while the US market has seen a significant re-rating driven by a narrow rally in select stocks, India has witnessed a healthier correction, particularly after weaker-than-expected September quarter earnings.
Despite earlier concerns about potential underperformance, Pershad remains optimistic about Indian equities. "How much more does it as a country needs to emerge? It has a $1 trillion market cap, massive economy, is rapidly growing, and has the busiest IPO market in the world. So I think that from here, the case for Indian equities remains pretty constructed, and we are positioned accordingly," he said.
Pershad also highlighted India's improving macroeconomic stability and the government's continued focus on infrastructure and policy reforms as key drivers for the growth. Pershad favours sectors aligned with India's long-term growth trajectory. He is particularly bullish on hospitality, financial services, consumer staples, and technology.
"Financials are well-positioned due to a robust credit growth cycle, while consumer staples benefit from rising incomes and increased consumption," he said. On the other hand, Pershad is cautious about sectors heavily reliant on global demand cycles, such as export-oriented manufacturing. "The unpredictability in global demand and ongoing geopolitical tensions make these sectors more vulnerable," he added.
Regarding consumer staples, he said, "Most of those are zero weights. They're not even underweights. So, we have a very selective exposure to that second.
I don't see that changing anytime." In the hospitality sector, Pershad highlighted the ongoing travel and tourism boom, supported by rising domestic travel and increased international arrivals. He favours hospitality companies with a strong presence in premium and luxury segments, as these are poised to benefit from higher average room rates and sustained demand.
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