Why Does Nomura See India’s Outlook Tied to US Relations Despite Strong Earnings?
Global brokerage Nomura, in its latest commentary, has taken a balanced stance on India. While the firm remains confident about India’s macroeconomic fundamentals and corporate earnings resilience, it flagged geopolitical tensions with the United States as a key area of concern. According to Nomura, any improvement in India–US ties would be unequivocally positive, potentially unlocking stronger investor flows into Indian equities.
About Nomura’s View
Nomura, a leading global financial services group, closely tracks emerging market economies and equity performance. In its discussion with CNBC-TV18, the firm reiterated that while India’s domestic story remains intact, global investors are also weighing external relationships. This suggests that diplomatic ties are beginning to play an increasingly important role in equity valuations.
Confidence in India’s Macros and Earnings
Nomura noted that India’s GDP growth remains among the fastest in the world, inflation has moderated, and corporate earnings continue to surprise on the upside. Sectors such as IT services, banking, and infrastructure are expected to remain long-term drivers. The brokerage remains less concerned about near-term macro shocks, considering India’s healthy fiscal positioning and domestic demand strength.
Why US–India Relations Matter for Investors
The current strain in India–US relations has created an overhang on investor sentiment. With the United States being a critical trading partner, technology collaborator, and investment source, uncertainty in ties could dampen foreign institutional inflows. On the flip side, Nomura stated that even a modest thaw would be “unequivocally positive” for Indian markets, potentially leading to higher valuations and stronger portfolio flows.
Comparing With Other Emerging Markets
Nomura highlighted that while India remains attractive, other emerging markets are also becoming investment destinations due to cheaper valuations. Countries in Latin America and Southeast Asia are seeing renewed investor attention. This competition underscores the need for India to maintain not only strong domestic fundamentals but also favorable external relationships.
Key Risks Investors Should Track
For investors, the risks go beyond just geopolitics. Any sharp oil price spikes, global monetary policy tightening, or prolonged weakness in exports could weigh on Indian equities. Nomura, however, stressed that India’s structural story remains intact, which should cushion against short-term volatility.
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Strategic Opportunities Ahead
Nomura believes that foreign investors will continue to monitor India’s policy direction, particularly with regard to taxation, regulatory clarity, and ease of doing business. Strengthening ties with global partners—especially the US—will be instrumental in sustaining premium valuations that Indian equities currently enjoy.
Investor Takeaway
Nomura’s stance reflects cautious optimism: India’s strong earnings trajectory and macro stability are undeniable, yet geopolitics could play a decisive role in shaping investor flows. A thaw in India–US relations may act as a catalyst for re-rating Indian equities higher, while prolonged tension could shift flows toward other emerging markets. Long-term investors should balance optimism with vigilance and track external developments closely. For more such analysis and market insights, visit Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
