DSP's Kothari: India 70% Lag Sets Up Reversion
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- Jay Kothari of DSP estimated Indian equities have cumulatively underperformed emerging and global markets by nearly 70% over the past two years, calling the gap unprecedented in scale and likely to mean-revert.
- Before the AI-led rally, Indian equities compounded at roughly 20%, compared to 5-6% gains in Korea and Taiwan, Kothari noted.
- India lacks hardware and semiconductor segments, which Kothari said have driven 50% of growth in emerging markets and the world.
- The upcoming IPO rush will divert capital from existing secondary markets, with foreign investors reportedly selling secondary holdings to fund IPO purchases, per Kothari.
- Kothari cautioned retail investors against chasing momentum, noting that 30-100% compound annual growth remains genuinely rare across markets and should not be treated as a realistic benchmark.
- Kothari advocates focusing on mispriced individual companies rather than mechanically following market-cap buckets or technology-heavy benchmarks.
Why it matters: Retail investors face a double risk: chasing new IPO listings while capital is being pulled from existing secondary markets, and anchoring returns to the 30-100% CAGR outliers of the past two years. Kothari's ~70% underperformance figure is the bull case for India, but only if investors resist momentum-driven purchases and look for genuinely mispriced names.
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