Rahul Chadha has made his call.
Shikhara Investment has moved decisively overweight on Indian equities, lifting the country's portfolio allocation to between 18% and 19% against a 13% benchmark weight in the Morgan Stanley Capital International (MSCI) Asia index. The pivot ends months of cautious positioning across emerging markets, backed by capital redeployments that began in late summer.
"Against a benchmark weight of 13% in MSCI Asia, our India exposure would be 18-19%," said Rahul Chadha, Founder and Chief Investment Officer of Shikhara Investment. "We were getting constructive on India from September onwards. September, October, we've added to India exposure."
Domestic demand inside mainland China continues to falter. That domestic slump has tilted institutional allocations sharply toward Mumbai, transforming India into a premier defensive destination for Asian emerging market capital.
Macro headwinds that triggered severe institutional selling during October have eased. De-escalation across West Asia post-Diwali lowered crude oil volatility, averting a balance-of-payments shock for domestic accounts. Currency stability followed. Speculation regarding a potential relaxation in long-term capital gains (LTCG) tax rates has also resurfaced, offering an unexpected tailwind for foreign fund flows.
| Metric / Strategy Parameter | Shikhara Portfolio Level | Benchmark / Market Reference | Source / Context |
|---|---|---|---|
| India Allocation Weight | 18.0% - 19.0% | 13.0% (MSCI Asia Index) | Shikhara Investment CIO |
| Accumulation Timeline | September – October | Post-October Position Reset | Shikhara Portfolio Allocation |
| Market Rebound Trajectory | +10% from Recent Lows | +5% to +7% Projected Room | Equities Assessment |
| Private Banking Compression | 4 Consecutive Quarters | Net Interest Margin (NIM) Trough | Earnings Filings Cycle |
| Hyperscaler Order Visibility | Fully Booked for 2027–2028 |
Market Context: Foreign institutional investors had unwound domestic positions across October on crude-price spikes and regional conflict risks. The reversal in oil pressure, paired with a 10% bounce off equity cycle lows, has stabilized external accounts and cleared runway for additional gains before valuations face scrutiny against north Asian hardware markets.
Banking led the drawdown. It will now lead the recovery.
Private sector lenders faced four grinding quarters of margin erosion as deposit repricing squeezed net interest income and net interest margins. That compression cycle is now exhausting itself. Chadha expects private banks to post accelerating earnings growth as funding costs top out and credit demand broadens.
Selected small-cap and mid-cap equities are also regaining traction. The segment suffered a sharp valuation wipeout during recent market pullbacks, but the risk-reward ratio has turned attractive following a firm recovery across large-cap benchmarks.
Beyond lenders and mid-caps, Shikhara's accumulation focuses squarely on domestic operating cash flows: manufacturing exporters, private hospital operators, specialized healthcare providers, and consumer internet platforms.
The fears were running very high for global markets, which is why we saw some unwinding of positions in October. A lot of those fears have been somewhat mitigated, and that is resulting in increased flows to emerging markets.
Portfolio managers still harbor deep reservations. The threat of artificial intelligence disruption looms over Indian large-cap tech conglomerates, with foreign allocators asking whether legacy balance sheets can defend regional market share against Korea and Taiwan.
Equities have staged a 10% rebound from their absolute lows. Chadha projects another 5% to 7% move before the market confronts its valuation ceiling. At that threshold, institutional focus will pivot back to the global technology trade.
Yet the global hardware cycle is pausing, not breaking. October's tech sell-off purged crowded speculative trades ahead of the United States elections, where political debate centered on semiconductor reshoring. Project delays remain marginal—at most 5% to 10% of prospective data center projects slated for 2028 are sliding rightward.
The physical compute deficit remains acute. Amazon Web Services confirmed in its October earnings updates that enterprise server infrastructure stands completely booked through 2027 and 2028, underpinned by Fortune 500 adoption, while Microsoft signaled similar backlogs. While governance and key-man risks at chipmaker Nvidia may pressure individual tickers, systemic contagion across broader tech allocations remains low.
Foreign institutional desks will track whether Indian corporate earnings can match the recent 10% price rebound through the approaching fiscal quarter, testing whether Shikhara's overweight stance prompts a broader institutional rotation across Asian emerging markets.
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