Manishi Raychaudhuri, a veteran emerging market investor, told ET Now that the structural case for India looking expensive relative to North Asian markets remains fully intact, and has in fact widened in a counterintuitive way.
The Korea-Taiwan paradox
- Korea EPS +120% in 6 months
- Taiwan EPS +30–40%
- India EPS: declining across all sectors
Korea is up 60–70% and Taiwan up roughly 40% over the past six months — yet both markets are actually cheaper today than they were before the rally. The reason is a spectacular surge in consensus earnings estimates: Korea’s EPS forecasts have risen nearly 120% over six months, while Taiwan’s are up 30–40%. Markets that rallied hard became cheaper because earnings grew faster than prices.India has experienced the opposite dynamic. Consensus EPS estimates for 2026 and 2027 are declining, and Raychaudhuri makes a pointed observation — there is not a single sector in India where estimates have moved higher.
“There is not a single sector I can point out which has had a consensus EPS estimate increase. This is the single biggest problem the Indian market is facing, the elephant in the room.”
The Strait of Hormuz risk Asia is ignoring
Raychaudhuri warns that North Asian markets are currently looking through a risk that could ultimately dent the very earnings driving their rally. Restrictions on transit through the Strait of Hormuz affect not just oil but sulfur — a key industrial input — as well as fertilisers and helium, which is critical for chip manufacturing. If the geopolitical standoff extends without some form of resolution, industrial earnings across Asia, including in chip-heavy Korea and Taiwan, could face pressure that markets have not yet priced in.
For now, the prevailing market view is that a US-Iran agreement of some kind will restore commodity flows before production disruptions materialise. But Raychaudhuri flags that a return to active military conflict would force a sharp reassessment of earnings expectations continent-wide.
What Indian investors should do now
- Private sector banks
- Defence & industrials
- Automobiles (4-wheelers)
- Healthcare & diagnostics
- Geographic diversification
His most emphatic advice for Indian investors is geographic diversification — moving a portion of capital into emerging markets and the broader Asia region, avenues he says are increasingly accessible even for retail investors.
Within India, he favours private sector banks on valuation grounds after years of underperformance, and industrials — particularly large conglomerates with cross-border exposure and select defence companies. On the consumption side, he highlights four-wheeler automakers and healthcare and diagnostic chains as sub-segments with strong growth visibility, while noting that e-commerce and food delivery, though expensive, have a compelling long-term outlook.
The opportunity set in India is real, Raychaudhuri concludes — but it risks being drowned out by the sheer momentum and enthusiasm currently concentrated in North Asian markets.
