The broader question, however, lingers: Is the Indian market heading into a downward trajectory?
‘Indian market dynamics are different’Sudip Bandyopadhyay, Group Chairman, Inditrade Capital disagrees with the bearish narrative. He argues that India’s structural setup is detached from the global AI frenzy.
“Not really. Indian market dynamics are different. We do not have the AI trade as such in India. Unfortunately, Indian companies have missed that particular bus…” he said, stressing that the valuation surge driven by AI overseas hasn’t found a comparable foothold in domestic markets.
He noted that while data-centre valuations in India have shown pockets of froth, they remain a “very-very small piece” of the overall market. And interestingly, weakness in the US AI complex has often translated into strength for Indian IT.
“India is a kind of anti-AI trade… when there is an AI bubble kind of a downward spiral, Indian IT companies are benefiting… because Indian IT is not in AI.”Trade deal becomes the major swing factorBeyond sector-specific trends, Bandyopadhyay believes the India-US trade agreement could become the single most powerful inflection point for foreign flows.“The sentiment will change for Indian equities amongst the foreign portfolio investors and we definitely expect lot of move in as soon as the trade deal gets announced… FII participation in Indian market is at kind of all-time low… Now that will change and the trigger will be India-US trade deal.”
Precious metals: Not a bubble, but a baseThe discussion moved to the Fed’s shifting tone and its impact on gold and silver, especially after India saw heavy festival-season buying.
Bandyopadhyay broke it down clearly.
On the policy front, he said: “I think at this stage the analysts in US are divided almost 50-50 between rate cut and not… I would not yet subscribe to the view that it is going to be a hawkish policy. Let us wait and watch.”
On metals: “Central banks across the world will continue to buy gold as their reserve… this trade has led to putting a bottom line on the gold prices.”
His view remains constructive. “Gold prices… will remain elevated… gold will continue to move up. Silver will remain steady… both gold and silver will continue to move up and provide decent return.”
RBI’s December dilemmaWith the RBI’s policy decision due on December 5, the governor’s recent comments sparked speculation of a possible rate cut. But the market expert urged caution.
“Considering the inflation at what level it is, interest rates can surely come down… but RBI will have to be extremely careful… We should not get into a situation where we have negative inflation.”
He also flagged rupee stability as a limiting factor.
“Indian currency is under significant pressure… interest rate reduction beyond a point does not help the cause of stability in rupee.”
Despite this, he believes markets aren’t dependent on rate cuts. Corporate earnings and the trade deal remain the principal drivers. ’India will continue to chug along’
Bandyopadhyay wrapped up the conversation on an optimistic note.
“India-US trade deal is probably a done situation now… Indian GDP will be on track and foreign investors will be back in India… Indian markets will move to a different level.”
He underscored the favourable macro backdrop:
“Oil prices are under control. Inflation has come to almost all-time low levels. Interest rates are coming down… We expect the consumption to pick up in a big way in Q3 and Q4… All in all, we are at a good position and we will continue to chug along and we will continue to remain the fastest growing major economy in the world.”
