Interest in India remains robust despite recent market volatility, according to Vikram Sahu, India CEO and country executive at Bank of America. Sahu highlighted that corporate interest is unwavering, driven by India's scale, growth prospects, and governance framework.
Investor Sentiment and Market Conditions
Investor sentiment is showing signs of improvement, with participation at Bank of America's flagship 2026 India conference increasing by 30% this year. Sahu noted that while foreign institutional investor participation is at its lowest in over a decade, this is largely due to elevated valuations and external uncertainties such as trade negotiations with the US and the West Asia conflict.
"Ultimately, capital responds to fundamentals," Sahu remarked, emphasizing that as regulatory friction reduces and business conditions improve, foreign investment will follow in a more durable manner.
Economic and Trade Outlook
Sahu pointed out that trade-related concerns have moderated with multiple agreements, including a framework with the US, while trade flows have remained resilient. However, West Asia remains a key source of uncertainty, potentially impacting energy markets and India's growth narrative.
Manufacturing and Growth Prospects
From a banking perspective, Sahu sees significant opportunities in manufacturing, which currently accounts for about 15% of GDP against a target of 25%. He cited electronics manufacturing as a sector with substantial growth potential.
| Sector | Current GDP Contribution | Target GDP Contribution |
|---|---|---|
| Manufacturing | 15% | 25% |
Valuations and Investor Focus
Foreign investors are returning selectively, focusing on companies with durable competitive advantages, earnings visibility, and strong governance. Sahu identified two triggers for a broader shift: greater clarity on the situation in West Asia and a definitive end to the earnings downgrade cycle.
Sahu concluded, "We are moving closer on the latter, but we are not fully through it yet," while noting that capital markets activity remains robust, with IPO demand supported by domestic flows alongside foreign institutional investor participation.
