Risk-reward ratio has turned favourable for long-term investors’

Indian equities can attract their share of emerging market flows without requiring foreign investors to “sell India” for markets like China — offering a strategic hedge to the artificial intelligence (AI) theme amid global volatility, Rahul Singh, chief investment officer, equities, at Tata Asset Management, discusses this and other matters with Puneet Wadhwa in an email interview. Edited excerpts:

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Is this a good time to invest in markets?

While we are not yet at rock-bottom levels that justify a maximum equity allocation, the thematic and “narrative” froth in a lot of sectors has receded. India’s valuation premium over other emerging markets has also moderated significantly dropping from a high of 90 per cent to approximately 50 per cent now. At this level, the market can attract its fair share of emerging market flows without requiring foreign investors to sell India to buy other markets like China, especially if they want a hedge to the AI theme.

Are there any pockets for investment at current levels?

While some midcap pockets still command high prices, the overall risk-reward ratio has turned more favourable for long-term investors, as the disconnect between price and fundamentals begins to narrow across several key industrial sectors.

What are your learnings from 2025?