Global investor interest in India remains very low, valuations biggest hurdle: UBS' Gautam Chhaochharia

Global investor interest in India remains muted despite resilience in domestic markets, with valuations emerging as the biggest hurdle for foreign investors, according to Gautam Chhaochharia, Head of Global Markets at UBS.

Speaking to CNBC-TV18 from the UBS Asia Investor Conference in Hong Kong, Chhaochharia said overseas investors continue to remain underweight on India even after months of market consolidation.

“I think it's been a long time since I saw this kind of low interest in India. So, the interest remains quite low among the global investor base,” he said.

According to him, investor conversations at the conference were largely centred around technology opportunities in Korea, Taiwan and Japan, while India drew selective interest only in bottom-up stock ideas.

“We have seen them being sellers for the last few months, but even the interest level is quite low as we speak,” Chhaochharia added.

He said India’s macro narrative, including concerns around oil prices and the rupee, has not helped sentiment among global investors. However, he noted that local liquidity flows continue to support domestic equities despite the absence of strong foreign inflows.

Chhaochharia said valuations remain the single biggest factor preventing global investors from turning constructive on India.

“With all the macro news flow and narrative not being positive, markets having seen a time correction, and global investors having sold off or lightly positioned India, it would be a tempting time to jump into Indian stocks. But the thing holding them back is valuation,” he said.

He added that only select sectors such as financials appear attractive from a valuation perspective, though growth expectations there are lower compared to a decade ago.

“So, pockets, yes, but broadly valuations are what is holding them back,” he said.

The UBS executive also pointed to concerns around the rupee as part of the broader macro debate around India. While some investors believe most negative triggers for the currency may already be reflected, the broader consensus still points towards continued weakness.

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“The broader consensus view around the rupee is that it remains weak or gets weaker,” Chhaochharia said.

Despite weak macro sentiment, he said India continues to offer opportunities for stock pickers, particularly in segments where companies can outperform broader economic trends through market share gains or product expansion.

“In the financial space, small finance banks or non-bank financials, a couple of consumer names found interest, and even utilities and energy are clearly seeing opportunities,” he said.