Gautam Trivedi, Managing Partner of Nepean Capital LLP said that foreign institutional investors (FIIs) are selling in India because US companies are seeing double-digit growth.

He pointed out that the US, with its $30 trillion economy, is growing at a gross domestic product (GDP) rate of 2.5%. He compared India’s valuation to that of the S&P 500 and highlighted that earnings growth for S&P 500 stocks is projected to be 13% in 2025.

Trivedi stated that while India boasts a 14-15% earnings growth on a rolling 12-month basis, US-listed companies are not far behind. He added that within the S&P 500, the ‘Magnificent 7’ stocks are growing at 18%, while the remaining 493 companies are seeing an average growth of 11%, indicating strong double-digit performance.

Referring to US policies, he stated, “If you look at what President Trump seems to be outlining for the foreseeable few years, lower taxes, lower inflation, and bringing investment and jobs back into America. If you are an asset allocator sitting in California, New York, Michigan, Ohio, etc., why would you want to put money in emerging markets?”

Also Read | Samir Arora: Reciprocal tariffs won’t hit most Indian industries, market near bottom

Trivedi further explained that foreign portfolio investors have withdrawn $56 billion from Asia (excluding Japan and China) since July 2024, indicating that India is not the only market facing outflows. He stated that emerging market fund managers dealing with redemptions tend to exit the most expensive markets first, which is why India has been hit the hardest.

On investment opportunities, he identified electronics manufacturing services (EMS) companies, particularly those in the air conditioning sector, as promising due to global demand and the China Plus One strategy.

Also Read | Jahangir Aziz explains why Trump’s trade strategy is broader than tariffs

He also pointed out that the renewable energy sector is expected to benefit from artificial intelligence (AI) driven power consumption growth. However, he suggested that power stocks may require a correction before becoming attractive investment options.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here