India is a structural bull market available at a cyclical valuation discount

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Investors can today access India’s long-term growth story at far more reasonable valuations than during the market’s peak exuberance, says Shah

By Mahesh Ravidas Nayak

Updated - November 07, 2026 at 09:57 PM.

Nilesh Shah, Managing Director, Kotak Mahindra AMC | Photo Credit: SHASHI ASHIWAL

India continues to attract strong global investor interest, but the investment case is increasingly shifting from chasing outsized returns to benefiting from long-term compounding, said Nilesh Shah, Managing Director, Kotak Mahindra AMC. Shah said global investors remain actively engaged with India, with several institutions already committing capital and others evaluating allocations.

Returning from a North America roadshow that included meetings with sovereign wealth funds, pension funds, endowments and family offices, Shah said India remains firmly on the radar of global capital. “Not a single investor said they did not want to meet,” he said, adding that several institutions have already committed capital while others are evaluating allocations to India.

‘Reasonable valuations’

Shah described India as a “structural bull market available at a cyclical valuation discount,” arguing that investors can today access India’s long-term growth story at far more reasonable valuations than during the market’s peak exuberance. “Compared to where valuations were two years ago, investors are effectively buying India nearly 30 per cent cheaper today,” he said.

“Compared to where valuations were two years ago, investors are effectively buying India nearly 30 per cent cheaper today. India is a structural bull market available at a cyclical valuation discount,” Shah said.

However, he cautioned against unrealistic return expectations. “If you’re expecting 30 per cent annual returns, India is not the market for you. But if you’re looking for high-single-digit to low-double-digit compounding over a decade, India remains one of the best investment opportunities globally.”

Resilient growth

According to him, India remains attractive due to resilient earnings growth, strong domestic participation and the potential return of foreign portfolio flows as investors rotate out of crowded AI trades and back into emerging markets. However, he stressed that the current rally is largely being driven by underweight investors moving back to benchmark allocations rather than a broad “overweight India” trade.

Among the key opportunities, Shah highlighted banking and financial services, premium consumption and modern manufacturing. He believes banks are entering one of their strongest phases, backed by healthy credit growth, low NPAs and strong balance sheets. He also expects the upcoming 8th Pay Commission to boost discretionary spending across automobiles, travel, consumer durables and hospitality, while manufacturing firms continue to deepen their role in global supply chains.

Going forward

As for the next market triggers, Shah pointed to the implementation of the 8th Pay Commission, a turnaround in foreign inflows, healthy corporate earnings growth and tax-policy reforms. Calling for greater consistency in taxation, he argued that the coexistence of Securities Transaction Tax (STT) and Long-Term Capital Gains (LTCG) tax creates distortions.

“STT was introduced in lieu of capital gains tax. From an investor’s perspective, one of them should go,” Shah said, while also advocating a distinction between promoters and investors in tax treatment and a more uniform framework for taxing interest income.

Shah expects FY27 earnings growth of 12-15% for large-caps, 20-25% for mid-caps and 15-20% for small-caps. He added that while India can sustain 5-7% growth, achieving double-digit expansion will require reforms in land, labour and ease of doing business.

Going forward, Shah expects 12-15 per cent earnings growth for large-caps, 20-25 per cent for mid-caps and 15-20 per cent for small-caps in FY27. While India can continue growing in the 5-7 per cent range, he said sustained double-digit growth will require reforms in land, labour, ease of doing business and project execution.

Published on November 7, 2026

Companies to follow

• Kotak Mahindra Bank Ltd

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