India must elevate its value curve to attract foreign investors, says PGIM CIO
India must elevate its value curve to attract foreign investors, says PGIM CIO
Industry leaders urge structural reforms and a value-focused approach as valuations align with fundamentals to lure foreign capital back into India.
The Indian economy needs to resolve its structural challenges to become a more attractive destination for foreign investors, even though valuations in the domestic stock market are now in line with their fair value, said Vinay Paharia, chief investment officer at PGIM India Asset Management.
Markets have faced one negative event after another, and he cautions against expecting equity to deliver high returns at all times. Equity is inherently volatile, with periods when prices run ahead of fundamentals and others when they lag behind. The key is staying disciplined and not turning investing into a circus by chasing short-term performance.
On the role of foreign institutional investors, he notes that if there is a potential for returns, money will flow to the market. While flows can shift as other emerging markets attract capital, India can regain momentum if it maintains a clear reform trajectory. He also points out that India’s relative attractiveness dipped about a year and a half ago, underscoring the need for ongoing structural improvements.
PGIM has a fairly wide global network and access to executives around the world, which helps distill insights on India’s positioning and the path forward. The takeaway is clear: a steady focus on value, framed by credible reforms, is essential to drawing foreign money back into India’s markets.
