CNBC’s Inside India newsletter: Have India stocks bottomed?

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

While the Nifty 50 index remains more than 7% below its all-time high reached on September 26, it has rallied about 10% since bottoming out on April 7, when trade tensions between the United States and China escalated.

While concerns over the state of the global economy soured risk sentiment around the world, the slide in Indian equities began long before Donald Trump began his second mandate as U.S. president and trade tariffs dominated news headlines.

Much of the pain for investors, though, has come from within. Valuations for stocks had risen while earnings flatlined, or worse, were deteriorating. At their peak, Indian large-cap stocks in the iShares MSCI India ETF were being valued at nearly 30 times the earnings, significantly higher than their five-year average.

On CNBC TV this week, Hiren Dasani, co-head of emerging markets equity at Goldman Sachs Asset Management, said India’s domestic fundamentals are improving and economic growth appears to have bottomed out, making India a diversification play amid the broader market uncertainty. The Indian market is “one of the only few markets” that is up since U.S. President Donald Trump unleashed his “reciprocal” tariffs on April 2, Dasani observed.

Meanwhile, Ruchit Mehta, head of research at SBI Mutual Fund, highlighted India’s “fair solid domestic growth story,” which he said is supported by strong consumption trends and by its advantage as a net importer amid global trade uncertainties. Mehta is also optimistic on the country’s banking sector.