Nifty, Sensex likely to underperform Asian peers in the near term: Manishi Raychaudhuri

The Indian equity market is likely to underperform its Asian peers in the near term due to several factors including the ongoing COVID-19 pandemic and its impact on the Indian economy as well as the country's high inflation rates and rising bond yields.

In an interview with CNBC-TV18, Manishi Raychaudhuri, Asian Equity Strategist, Equity Cash Asia Pacific at BNP Paribas said that the Indian equity market is likely to underperform Asian peers in the near term.

He said, “The market in the short-term is underperforming and will possibly continue to underperform its Asian peers going forward and that is one of the reasons why in our most recent Asian model portfolio reshuffling we did not upgrade India to an overweight, we still retain a neutral stance.”

Talking about IT space, Raychaudhuri said that the IT sector is likely to experience some wobbliness in the near term. This is due to the unprecedented and unexpected ramp-downs from clients that IT companies have been facing in recent times. However, despite the short-term challenges faced by the sector, he believes that there is potential for long-term growth.

In fact, he went on to say that he likes IT companies in a 2–3-year timeframe. This suggests that despite the near-term challenges faced by the sector, Raychaudhuri believes that IT companies have the potential to rebound in the long term and deliver strong returns for investors who are willing to hold onto their investments for an extended period.

“If someone has a short-term outlook on the Indian market (equity) then it is possibly better to stay underweight on the sector, but if one has a 2–3-year timeframe then I would think of focusing on the large frontline IT service companies. But one must keep in mind that the near-term might continue to be wobbly,” said Raychaudhuri.

Therefore, while the Indian market may face some challenges in the near term, including underperformance compared to its Asian peers, investors who are willing to take a longer-term view may find opportunities in the IT sector. Raychaudhuri's comments are in line with the broader sentiment among market analysts, who have been predicting a mixed outlook for the IT sector in the near term. While the sector is facing several challenges now, including rising competition, changing technology trends, and the ongoing pandemic, there is still potential for long-term growth in the sector.

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