Market Correction Nearing End, India's Long-Term Path Remains Intact: Rajiv Batra of JP Morgan

Rajiv Batra, Head of Asia & Co-Head of Global Emerging Markets Equity Strategy, has suggested that a significant portion of India's market correction is behind us.

"This is a period in October and November where we will revisit and markets will take a breather, some consolidation will be there and most importantly you will be seeing a furious rotation at a sectoral level where you will not have any clue whether we are moving defensive or cyclical or large-cap or mid-cap; that is the phase we are in right now but the good part is a sizeable amount of correction is over and maybe a 5% down the line from here will get India back to the trend valuation which most of the foreign investors and long term investors are eagerly waiting for...," he said in a discussion with NDTV Profit, advising bearish traders to exercise caution moving forward.

On money rotating from India to China, he stated that the long-term path does not change for India. "We continue to maintain our structural overweight on the Indian equity market.”

Batra noted that recent uncertainties surrounding the U.S. elections have led many investors to shift their focus toward dollar-denominated assets. Despite these shifts, India has seen robust inflows, with approximately $16 billion entering the market between June and September.

While J.P. Morgan has revised its GDP estimates for China for this quarter and the next, Batra highlighted that long-term challenges persist for the Chinese economy.

He also pointed out that the cyclicality of rural consumption has yet to gain traction but is expected to improve as the festive and wedding seasons approach.

Batra underscored the presence of both structural and cyclical investment themes in India, particularly in sectors such as power and healthcare. He believes these areas are well-positioned to benefit from the evolving economic landscape, providing attractive opportunities for investors.

"India's GDP growth is expected to remain above potential at least in a relative term compared to other EM markets, other Asia markets which means the risky asset class in India will keep on doing well relative their global EM and DM counterpart," added Batra.