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The India Briefing

India’s sweetest export story

This month, we break down some of the dynamics arising from higher oil and input prices, as well as inflationary impacts and India’s diverse mix of opportunities given the breadth of the market.

Please find below our latest thoughts on India:

  • May has been characterised by rapidly shifting global cues, most visibly reflected in crude oil price volatility.
  • While Indian equities experienced a period of overall weakness so far this month, sharp rebounds emerged on days when crude prices softened, highlighting the market’s sensitivity to energy dynamics.
  • Domestic investors continued to buy on dips, helping to cushion volatility, even as foreign outflows persisted.
  • This growing domestic support reflects a structural shift in market behaviour, with rising retail participation and sustained equity mutual fund inflows reducing dependence on foreign capital relative to prior cycles.
  • That said, foreign flows remain an important signal, underscoring that India continues to be assessed against global opportunities - particularly on the metrics of macro stability, earnings growth, and valuations.
  • Macro stability remains a key policy priority. Government debt stands at ~82% of GDP, sitting in between levels in developed markets of Germany and France, and remains moderate in a global setting.1
  • In the context of the current energy shock, we view the situation as manageable. India’s structural sensitivity to oil has declined over time, supported by a larger services export base and stronger FX reserves.
  • We interpret recent policy messaging around fuel conservation and work-from-home as precautionary demand management rather than a signal of supply stress.
  • Importantly, India is entering this energy episode from a position of greater strength than before. Key vulnerability indicators - current account deficit, inflation, external balances – are structurally more resilient than in prior oil shocks.
  • Earnings growth expectations have moderated somewhat since the onset of the Iran-related tensions, but India continues to offer one of the strongest earnings growth profiles among major economies.
  • In the recent reporting season, corporate earnings outcomes were better than expected. The financials sector, in particular, delivered solid results.
  • Large banks are benefitting from strong balance sheets and lower funding costs, smaller non-bank lenders are seeing tailwinds from a more accommodative credit environment, insurance companies are witnessing a shift in savings into protection products, and exchanges are experiencing volume uplift from market and FX volatility.
  • While elevated oil prices and input costs may weigh on discretionary consumption and sentiment in the near term, the overall risk at this stage does not appear destabilising for corporates.
  • Inflation concerns have again resurfaced as a result of the energy shock; however, even under a sustained ~US$100/bbl oil scenario through 2026, consensus expectations suggest CPI should remain within or only marginally above the Reserve Bank of India’s 4–6% target range.
  • One tangible example of inflationary pressures is surfacing among Indian mango prices overseas. A box, typically holding 10-12 mangoes, costs US$50 to US$60 this season, up from US$40 to US$45 in 2025.2
  • An Indian mango commands five times as much as a standard mango sold in US grocery stores (mostly from Mexico) and is priced at roughly the same level as a Costco lobster tail. Yet buyers vastly outmatch supply. There are waiting lists for entire crates.2
Figure 1: Top 5 export markets for Indian mangoes
An Indian mango commands five times as much as a standard mango sold in US grocery stores (mostly from Mexico).

An Indian mango commands five times as much as a standard mango sold in US grocery stores (mostly from Mexico).

  • Market valuations remain a key area of investor debate. India trades at a ~20x forward P/E, sustaining a longstanding premium to Asia ex Japan (~13x) and broader Emerging Markets (~12x).3
  • This premium has been supported by India’s more consistent earnings delivery, higher company ROEs, lower export beta, large domestic marketplace, and relatively stronger governance standards.
  • Following the strong rally in Taiwan, P/E multiples between India (~20x) and Taiwan (~21x) are now comparable, though concentration risk differs significantly. TSMC alone represents 57% of the MSCI Taiwan index, whereas the top 10 index constituents in India combined contribute 35% of the total composition.3
  • India’s broad-based growth opportunities across sectors, stemming from deepening financial penetration, a steep manufacturing and supply chain ramp-up, digitalisation and productivity trends, and rising middle class consumption continue, in our view, to offer an attractive and diversified mix that is not tech/AI-dependent.
  • On the topic of tech/AI, India is also becoming increasingly relevant. The boom in Indian data centres, along with innovation from private space start-ups and breakthroughs in nuclear technology, offer additional growth levers.
  • In the end, outcomes are dictated by market forces. We believe long-term demand for India’s equities, like its treasured mangoes, will prove resilient, underscoring the strength of the underlying companies and the market’s diverse growth opportunities.

1 Trading Economics, India Government Debt to GDP, as of 22 May 2026.
2 The Wall Street Journal, Americans Will Do Anything to Get Indian Mangoes, as of 4 May 2026.
3 MSCI, as of 30 April 2026. P/E = 12m forward price-to-earnings estimate.

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