Lack of AI plays makes Indian markets less attractive to foreign investors: Ajay Bagga

Lack of AI plays makes Indian markets less attractive to foreign investors: Ajay Bagga

Banking and market expert Ajay Bagga on Wednesday said that Indians are “disappointed” with Indian market performance for several reasons, including weak urban consumption, expensive market valuations, and the lack of AI plays, making Indian markets less attractive to foreign investors.

Speaking to news agency ANI, Bagga said, “I think we have been quite disappointed by the Indian market performance, earnings recovery is still not coming through. Urban consumption remains an issue. Rural consumption is still picking up. At the rate at which the economy is going, the market valuations are still on the higher side.”

“So in that kind of scenario, it's very difficult to attract marginal, incremental money from FDIs,” he added.

Ajay Bagga also cited the absence of a “pure-play AI” segment as another reason for the poor market performance.

He said that at present, global money is being allocated to AI plays, with countries such as China, South Korea, and Taiwan emerging as beneficiaries, adding that India has not been able to offer similar opportunities.

“Flows are curtailed, earnings fundamentally are probably a quarter away before we can say, yes, we are hitting the 14 % aggregate growth levels. Third is the lack of AI plays, which could attract incremental money, and fourth is the relative attractiveness of other emerging markets,” Bagga said.

“These are what are causing Indian markets to be at a standstill, and today, like markets are falling, that's more a global issue,” he added.

“Some liquidity is going out of the market, but overall the macro is strong, inflation is well in control, RBI should cut rates, the government has done a lot last year, income tax, GST, rate cuts, liquidity in the markets, all four were ticked mark between the government and RBI. Still, we have not seen the markets really responding. So, we'll have to wait for the fundamental cycle change, and that could take a quarter or two quarters...” he noted.

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