At a time when Indian equities are grappling with rich valuations and relatively modest earnings upside, global markets are increasingly drawing investor attention.
In this edition of ETMarkets Smart Talk, Nikhil Advani, Managing Director – International Business at LGT Wealth India, highlights why India currently appears expensive compared to other emerging markets such as Taiwan and South Korea.
He discusses the growing appeal of global diversification, the role of currency depreciation in shaping investment decisions, and how Indian investors can tap into international megatrends like AI, semiconductors, and electrification while balancing risks in an uncertain geopolitical environment. Edited Excerpts –
Q) Thanks for taking the time out. Well, amid the gloom and the doom, US markets hit a fresh record high in April. What are you advising your clients who have invested in US markets?
A) The US equity market has made a very strong recovery post the sharp initial drawdown at the start of the US-Iran conflict, with the S&P 500 reaching an all-time high earlier this month.
The 7 big tech companies – Nvidia, Alphabet, Microsoft, Apple, Amazon, Broadcom, and Meta had a $ 4 Trillion increase in market value since the stock market bottomed out last month.
To give context, this number is close to the total market capitalization of the Indian equity market! Quarter 1 earnings growth of US companies is expected to be in the 12% to 13% range, and earnings reported so far have been remarkably strong. The big tech companies are set to report earnings towards the end of April.
Geopolitical tensions persist, so given this backdrop we are advising our clients to remain invested in long-term secular growth themes that can withstand short-term volatility, such as semiconductor equipment and power infrastructure, but to also make allocations to quality dividend names, and to take hedging exposures via energy, gold, and defence.
Q) I am sure you must be getting calls to invest overseas. What are the major concerns of investors?
A) Yes, many clients are reaching out to us to invest overseas. The Indian market has underperformed both developed and emerging markets, and the Rupee has depreciated significantly over the last 12 months. Even after the sell-off, India is widely considered to be an expensive market.
Emerging markets like Taiwan and South Korea have better earnings growth and are cheaper than the Indian market. AI and biotech innovation is happening in the US and China.
Indian investors want access to these megatrends and are also concerned about the erosion of their global purchasing power because of a weaker Rupee.
Q) Tim Cook announced he is stepping down as Apple CEO after nearly 15 years, with the official transition on September 1, 2026. Do you see this in right direction, and will it impact on the price performance of the stock? Are you getting queries about Apple?
A) Tim Cook will step down as Apple CEO in September, ending a 15-year tenure during which he helped Apple become one of the most valuable companies.
During his term, Apple shares have gained roughly 2000%, and the company has hit a market capitalization of $ 4 Trillion. Cook will stay on at Apple as executive chair and will hand over the reins to John Ternus.
Tenrus is an Apple veteran who has been with the company for 25 years. He is Apple’s head of hardware and oversees the engineering of its best-selling products including the iPhone, iPad and Mac.
Investors will be keen to see where he takes Apple on AI development; this is an area where Apple seems to be falling behind as compared to the other US mega tech firms, as it relies on Google’s Gemini to power its AI features. The main question on Apple is how it will adapt to the age of AI, under John Tenrus’ leadership.
Q) FAANG, Mag 7 are acronyms which we have come across in US markets. Is there another acronym which is getting popular?
A) Well, the most frequently used acronym today is TACO – Trump Always Chickens Out! It was coined by Financial Times columnist Robert Armstrong and describes a recurring market pattern where Trump issues a bold policy threat causing markets to dip, only to walk back or delay the move.
Investors have benefited from the TACO trade – buying the dip and profiting when the market recovers.
Q) With US markets hitting fresh record highs how much one should ideally park monthly in overseas stocks or ETFs?
A) India represents less than 5% of global equity market capitalization and is heavily concentrated in the financial, IT and energy sectors. The Rupee has a depreciating bias owing to our dependence on oil imports.
Hence, Indian investors need to seriously consider country, sector and currency diversification to grow their wealth. Gradual allocation overseas with an eventual build-up to 20% of overall financial assets would be ideal.
Q) We are in the first month of the financial year 2027. When is the ideal time to relook or rebalance their global portfolios?
A) At LGT, we build long-term multi-asset global portfolios for our clients. While diversification does reduce volatility in portfolios, it is important to occasionally rebalance to maintain resilience.
We have entered the new financial year with significant geopolitical tensions surrounding the US-Iran conflict.
There are concerns about inflation. We see a growing need to reduce equity beta and complement traditional long-only portfolios with less correlated strategies such as long-short, market neutral, and infrastructure assets.
Q) Which sectors are hogging limelight in 2026? Is it power, Infrastructure etc. and why?
A) There is renewed investor focus on the electrification theme driven by Middle East related energy security concerns.
Higher oil prices and improvements in batteries are re-awakening interest in electrified transportation and boosting demand for energy storage to manage power volatility amid the AI inference boom. Infrastructure assets such as data centres, grids, renewables and storage are key opportunities in 2026.
Q) Any top ETFs which investors should keep on their watch list?
A) An ETF that tracks the MSCI All-Country World Index (ACWI) is one of the best ways for Indian investors to gain access to the global equity market in a single investment.
The index has a 65% exposure to the US, and the balance 35% exposure to developed and emerging markets in Asia and Europe, across sectors such as technology, healthcare and financials.
It also gives currency diversification as a third of the portfolio is in non-US dollar securities. It is a benchmark for global long-only equity fund managers, and most managers have been unable to outperform this index over the long term.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)