10/11/26, According to Nimesh Chandan, CIO of Bajaj Asset Management, India remains an attractive investment destination, with corporate earnings growth remaining resilient despite elevated energy prices, rising global interest rates and geopolitical uncertainty.

As conditions normalise, the market is likely to refocus more on corporate earnings. "Combined with reasonable valuations in several sectors, this supports our expectation of double-digit equity returns over the next year," he said in an interview with Money Control.

Private sector banks remain his highest-conviction sector, supported by improving liquidity conditions, a pick-up in credit growth, favourable interest-rate dynamics and attractive valuations.

Internet platforms, meanwhile, offer an attractive proxy for consumption, given rising penetration levels and their higher growth potential compared with traditional consumer companies, Chandan said.

Have you noticed signs of risk-off sentiment emerging in US AI stocks, particularly following their recent decline after quarterly earnings announcements?

 The sharp correction in AI-related stocks, semiconductor indices (KOSPI and PHLX Semiconductor Index down 30 percent to 40 percent from their peaks) and rising CDS spreads in some of the data centre companies suggest some risk-off behaviour.

However, we see this largely as a correction of excess optimism in AI-related investments rather than a deterioration in the long-term AI opportunity. The structural case for AI adoption remains intact.

If the recent correction in US AI stocks deepens, could it trigger a broader shift in global capital flows towards emerging markets, including India?

India has already started seeing an improvement in foreign flows. As enthusiasm around the concentrated AI trade moderates, investors are likely to look more broadly across markets.

India remains attractive because earnings growth has stayed resilient despite high energy prices, rising global interest rates, and geopolitical uncertainty. A two-year time correction in Indian equity markets has led to reasonable valuations in large caps and select pockets of small caps.

Do geopolitical tensions and crude oil prices continue to pose significant risks to the Indian equity market?

We believe the changed political scenario in the US after the midterm elections makes it more likely that some sort of compromise may be worked out, leading to a cessation of hostilities in the Persian Gulf. India is a large importer of energy, and hence geopolitical tensions and oil prices remain important risks for India.

However, Indian corporates have demonstrated strong earnings resilience despite these headwinds. Any easing of tensions and normalization of shipping routes, as seen in the last few days, would provide an additional tailwind through lower energy and logistics costs.

Given the recent recovery in equity markets, do you believe the market has bottomed out and is gearing up for a fresh leg of an upmove? Is a potential 10–20 percent rally during Samvat 2083 a realistic expectation, or would that be too optimistic?

Rather than focus on market bottoms, we focus on earnings and valuations. Earnings were strong in the June quarter and improved further in the September quarter despite a challenging macro environment. The market has been focused on geopolitical tensions and volatility in energy prices.

With a return to normalcy, it should increasingly refocus on earnings. Combined with reasonable valuations in several sectors, this supports our expectation of double-digit equity returns over the next year.

Beyond crude oil prices and geopolitical tensions, what are the key domestic and global challenges that could influence the Indian equity market's performance during Samvat 2083?

Beyond crude oil and geopolitics, the key variable to watch is the continuation of El Niño conditions. Its impact on food inflation, rural consumption, and certain segments of retail credit will be an important monitorable for the market.

Which sectors are you most bullish on for Samvat 2083?

Private sector banks remain our highest-conviction sector given improving liquidity conditions, a pick-up in credit growth, supportive interest-rate dynamics and attractive valuations.

We also remain positive on consumer discretionary, especially automobiles. Internet platforms offer a good proxy for consumption due to rising penetration and higher growth relative to traditional consumer companies. Pharmaceuticals also offer compelling medium-term opportunities.

Do you expect any significant changes to India's tax structure or capital gains taxation to attract greater foreign investment?

A predictable regulatory environment is a very important driver of foreign investment. While any rationalization of capital gains taxes would improve India's relative attractiveness to foreign investors, continued reforms and policy stability will play a bigger role in strengthening India's appeal as an investment destination.

Report by Sunil Sankar Matkar, Network18 

Disclaimer: The views and investment tips expressed by investment experts are their own and not those of us. We advise traders to check with certified experts before taking any investment decisions.