With the overall market narrative not as strong as it was in 2024, investors are not in a rush to allocate fresh funds to India.
“Performance gives confidence, and confidence is what drives flows,” he said.
According to Jain, there is a shift in sentiment, as the earlier narrative that there is no alternative (TINA) to India is now being challenged. As a result, investors are looking at other markets too, and may prefer to time their entry into India more carefully.
“We see IPOs coming, blocks coming, and that’s where all the flows might come in,” he said, suggesting that new capital might be directed towards primary market issuances rather than the listed secondary markets. This, in turn, could make it harder for indices like the Nifty to attract sustained foreign fund flows at this stage.
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Jain expects crude oil prices to remain stable within the $60–$80 range. With current prices hovering around $65–$67, he sees this as a supportive environment for India, helping to keep inflation in check.
The low-inflation scenario will benefit not just sectors directly linked to oil but also interest rate-sensitive sectors, as stable prices mean interest rates are likely to stay favourable over time.
CLSA turned overweight on the IT sector recently, driven by improving trends in global markets, especially in the US, which could boost confidence for Indian IT companies.
“Global trade is now settling down, perhaps the US market is not looking that bad, and all of that will give confidence for IT companies in terms of the commentary that they gave,” he said. In April, cautious guidance had weighed on IT stocks, but with valuations now more reasonable and sentiment gradually improving, Jain sees IT as an attractive space among defensive sectors.
He added that in a range-bound market, there is a preference for defensives to protect capital. This is why CLSA currently holds overweight positions not only in IT but also in utilities, FMCG and staples.
For full interview, watch accompanying video
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