Speaking to ET Now, Vikash Kumar Jain highlighted that investor sentiment has cooled considerably over the past year. “It has been tough to find foreign investors who are bullish on India,” he said. “Just 12 months ago, markets were hitting new highs, and it was hard to find anyone bearish. Now, that sentiment has completely reversed.”
Jain emphasised that the market’s reaction will largely depend on the scale and perception of the GST changes. “If the government introduces a measured revision focused on specific commodities, the impact will be selective. But a broader GST cut aimed at boosting consumption could be seen as a positive surprise, pushing domestic growth and driving a stronger market response,” he noted.
Despite encouraging GDP data and a strong economic backdrop, foreign institutional investors have remained largely absent, with net outflows reaching substantial levels in recent months. Jain attributes this to both valuation concerns and shifting global perceptions. “The long-term India story remains promising, but recent geopolitical shifts and renewed interest in other emerging markets, like China, have made near-term investors cautious,” he explained.
He added that India’s market, while underperforming against emerging market benchmarks over the past year, has also become relatively cheaper on a historical basis. “The premium versus global benchmarks has cooled, but we’re still above average. It’s a gradual process, and without a visible trigger, investor interest may take time to return,” Jain observed.
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As the GST meet unfolds, analysts say that any signal of a consumption push or broader economic support could reignite investor confidence. Meanwhile, the market enters the event with a sense of cautious optimism, weighing the potential for policy surprises against the backdrop of subdued foreign participation.
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