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What is the story about?
India is not the market to chase right now, at least not for the next year or so, according to Sunil Tirumalai, Head of Emerging Markets Asia Equity Strategy at UBS India.
Speaking on the sidelines of the UBS India Conference 2026, Tirumalai said it's not that India is doing badly. Growth is still running at around 7%, the strongest in the region. The problem is that everyone else is having a good run too, and in some cases an even better one.
China's exports are firing. Commodity exporters like South Africa and Brazil are riding higher prices. And then there's Korea and Taiwan, sitting on top of the AI semiconductor boom that Tirumalai says has stretched on far longer than anyone expected. As he put it, "who would have thought a copper miner would be categorised as an AI stock?"
The numbers support his caution. Earnings growth for emerging markets as a whole is tracking near 25-26% over the next two years, though that figure is skewed heavily by Korea and Taiwan. Even excluding those two, the rest of the pack is still growing earnings at 18-19%. India, by comparison, is at 16-17% and also trades at a premium valuation.
He doesn't think this is a permanent state of affairs, though. His view is that the current cycle favouring semiconductors and commodities will eventually turn, while India's growth is less tied to global swings and should hold up regardless of what the rest of the world is doing.
"The relative trade-off is more about the other markets slowing down when they get into their bad half of the cycle, rather than India going up meaningfully," he said.
On sectors, Tirumalai and his team are backing financials. Banks look cheap, credit growth is finally picking up on the topline after a long dry spell, and UBS isn't seeing any near-term asset quality worries.
Life insurance is the other pocket he likes. he added, "Our team believes that it's been beaten down aggressively because of regulatory worries, and it's now more than sufficient underperformance that's happened, and and it is indeed at the end of the day an underpenetrated sector. "
He's also selectively positive on consumption names benefiting from the recent GST cuts, along with structural stories like jewellery.
The bigger risks he's watching sit outside India altogether. Crude oil above $100 a barrel — with the Strait of Hormuz effectively shut for six months now — is one. Rising bond yields, worsened by the US fiscal deficit and heavy borrowing by AI hyperscalers, is the other.
Tirumalai says the real test isn't the yields themselves but whether AI hyperscaler capex eventually turns into real revenue. If that monetisation story starts to wobble, he warned, it would ripple straight through emerging markets — because, in his words, EM today has effectively become "a big large bet on the US AI story itself."
For the entire discussion, watch the accompanying video
Follow our live blog for more stock market updates
Speaking on the sidelines of the UBS India Conference 2026, Tirumalai said it's not that India is doing badly. Growth is still running at around 7%, the strongest in the region. The problem is that everyone else is having a good run too, and in some cases an even better one.
China's exports are firing. Commodity exporters like South Africa and Brazil are riding higher prices. And then there's Korea and Taiwan, sitting on top of the AI semiconductor boom that Tirumalai says has stretched on far longer than anyone expected. As he put it, "who would have thought a copper miner would be categorised as an AI stock?"
The numbers support his caution. Earnings growth for emerging markets as a whole is tracking near 25-26% over the next two years, though that figure is skewed heavily by Korea and Taiwan. Even excluding those two, the rest of the pack is still growing earnings at 18-19%. India, by comparison, is at 16-17% and also trades at a premium valuation.
He doesn't think this is a permanent state of affairs, though. His view is that the current cycle favouring semiconductors and commodities will eventually turn, while India's growth is less tied to global swings and should hold up regardless of what the rest of the world is doing.
"The relative trade-off is more about the other markets slowing down when they get into their bad half of the cycle, rather than India going up meaningfully," he said.
On sectors, Tirumalai and his team are backing financials. Banks look cheap, credit growth is finally picking up on the topline after a long dry spell, and UBS isn't seeing any near-term asset quality worries.
Life insurance is the other pocket he likes. he added, "Our team believes that it's been beaten down aggressively because of regulatory worries, and it's now more than sufficient underperformance that's happened, and and it is indeed at the end of the day an underpenetrated sector. "
He's also selectively positive on consumption names benefiting from the recent GST cuts, along with structural stories like jewellery.
The bigger risks he's watching sit outside India altogether. Crude oil above $100 a barrel — with the Strait of Hormuz effectively shut for six months now — is one. Rising bond yields, worsened by the US fiscal deficit and heavy borrowing by AI hyperscalers, is the other.
Tirumalai says the real test isn't the yields themselves but whether AI hyperscaler capex eventually turns into real revenue. If that monetisation story starts to wobble, he warned, it would ripple straight through emerging markets — because, in his words, EM today has effectively become "a big large bet on the US AI story itself."
For the entire discussion, watch the accompanying video
Follow our live blog for more stock market updates
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