Standard Chartered's advice to investors on navigating India's expensive equity market

Solid earnings growth and domestic fund inflows have been driving Indian markets, and while it is now more expensive than other emerging markets (EMs), Rajat Bhattacharya, Senior Investment Strategist at Standard Chartered, believes "if you keep averaging into the pull backs that happen, you will benefit from the long term growth story."

Bhattacharya is bullish on capital goods, industrials, and large cap companies, given that the government has been accelerating investments with a larger capital expenditure (capex) outlined in the recently released Budget 2024.

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Indian equity markets have had a stellar run over the last decade, with the Nifty 50 delivering positive annual returns for eight consecutive years and trading at record-high levels. The index is up over 5,000 points in the last 11 months, having made a bottom at 16,828 on March 20, 2023.

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The Nifty is trading at a financial year 2025 price-to-earnings multiple of 18 times and a financial year 2024 multiple of 20 times. Jain believes that while valuations are indeed extended but are not "crazy."

According to Jonathan Garner, Chief Asia and EM Strategist at Morgan Stanley, who spoke to CNBC-TV18 earlier, India is in a virtuous cycle of strong nominal GDP growth, strong capital inflows, healthy corporate profits, and a more stable environment for investors than ever seen historically. "So it is no surprise to us that India is in a persistent secular bull market."

Earlier, Rajiv Jain of GQG Partners had also pointed out to CNBC-TV18 that India's earnings growth has been the best among EMs over the last five years but the country has not received its due in terms of foreign investments. GQG Partners has investments worth $22 billion in India.

For the entire interview, watch the accompanying video