Templeton's Rajasa Stays Constructive on India Equities — SkimNews
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- Rajasa K., vice president and India equities portfolio manager at Templeton Global Investments, is "reasonably constructive" on Indian equities despite tariff disruptions, AI-driven narrative shifts, FII outflows, and a prolonged geopolitical conflict pushing crude above $100.
- Financials were a key contributor to Q1 earnings growth; banks are viewed as long-term compounders benefiting from improving credit and deposit growth, better liquidity, and likely rate increases ahead that would help margins.
- Small and midcaps are described as a "fertile hunting ground" for newer growth sectors in manufacturing localization, electronics, defense indigenization, and financial deepening — though she notes headline valuations are expensive.
- The IT sector is split: legacy revenue faces deflationary pressure from AI and the industry is shifting from effort-based to outcome-based models; valuations look compelling, but earnings inflection isn't certain yet.
- Indian markets have logged two years of "barely any market returns," but Rajasa says earnings growth is now coming through and advises using corrections to accumulate more aggressively via SIPs.
- Since Donald Trump's return as US President, Rajasa says elevated volatility "feels like a permanent feature" alongside a structural shift toward self-reliance and independent supply chains.
- On AI valuations, she doesn't call it a broader bubble but says the market is moving into a phase of becoming "more nuanced and discerning" about which AI plays to participate in.
Why it matters: After two years of flat Indian market returns, Rajasa's framework offers a concrete playbook: financials and small/midcaps tied to manufacturing localization, electronics, and defense indigenization are positioned for structural growth even as crude above $100 and permanent volatility argue for a buy-on-dips strategy through SIPs rather than market timing.
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