With its solid earnings growth, India might prove to be a strong support for the broader Asian equity markets, according to Herald Van Der Linde, Head of Asia Equity Strategy at HSBC.

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Even if China performs exceptionally well, he predicts the capital flows to the country are more likely to come from other Asian economies like Korea, Japan, and Taiwan as "there are people who want to stay with India because the growth story is pretty good," Linde told CNBC-TV18.

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Discussing the current market dynamics between India and China, especially in light of cooling bond yields, Linde highlighted a potential short-term advantage for China.

He noted that Chinese internet companies, particularly those trading in Hong Kong, have shown impressive growth, influenced by the declining bond yields. This trend suggests that China might initially outperform India as global economic conditions improve.

However, "eventually, it's going to come down to earnings as well, and there, I think the story in India is going to be better," he said.

Foreign Direct Investment (FDI) flows into China turned negative for the September quarter for the first time since 1998. The CSI 300 has shed nearly 10% so far this year and is one of the world's worst-performing equity indices this year.

Numerous global market experts are increasingly spotlighting India as a key player in the emerging market landscape.

Timothy Moe, Chief APAC Strategist at Goldman Sachs on November 22 told CNBC-TV18 that India's long-term appeal remains strong and the market is also relatively cheap.

"We would be reasonably constructive on the investment flow outlook for India," Moe stated, cautioning, however, that this optimism is set against the backdrop of intense competition from other regions.

The competition is visible in the foreign institutional investor (FII) outflows seen this month and the last. But there have also been foreign portfolio investment (FPI) inflows of over $10 billion so far in 2023.

So far, the Nifty 50 has rallied nearly 1,000 points from the October 26 low of 18,837. At current levels, the Nifty 50 is trading at a one-year forward price-to-earnings ratio of close to 19 times.

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(Edited by : Shweta Mungre)

First Published:Nov 23, 2023 12:45 PM IST