Indian equities lag global peers but offer long-term opportunity: Abakkus
Synopsis
India's Nifty 50 TRI lost 0.4% over the year to June 2026 while South Korea's Kospi surged 103%. But Abakkus Investment Managers argues this gap is a sentiment story, not a fundamentals story — and that FIIs rotating out of AI-driven markets could make India the next big beneficiary within six to twelve months.
Key Takeaways
India's Nifty 50 TRI returned -0.4 per cent in the one year ending 30 June 2026 , against South Korea's Kospi at 103.2 per cent and Taiwan's TAIEX at 83.2 per cent .
In the most recent one-month period, India's Nifty 50 TRI gained 2.4 per cent while South Korea's Kospi fell 22.2 per cent .
Abakkus Investment Managers attributes India's underperformance to sentiment and valuation, not macroeconomic weakness.
Foreign institutional investors who booked profits in South Korea may redeploy into India over the next 6 to 12 months , the report forecasts.
RBI initiatives including FCNR schemes and declining imported energy dependence are cited as structural supports for rupee recovery.
Indian equities have underperformed global markets over the past year but are positioned to emerge as a compelling long-term investment destination as foreign capital flows rotate back, according to a report released on Thursday, 6 August 2026 by Abakkus Investment Managers. The firm argues that the current underperformance is driven by sentiment and valuation factors rather than any deterioration in macroeconomic fundamentals.
The Performance Gap
The numbers tell a stark story. India's Nifty 50 TRI returned a negative 0.4 per cent in the one-year period ending 30 June 2026, while South Korea's Kospi surged 103.2 per cent and Taiwan's TAIEX delivered 83.2 per cent over the same period. Japan's Nikkei returned 56.7 per cent and the US Nasdaq gained 20.1 per cent.
However, the one-month picture shows a reversal in momentum. India's Nifty 50 TRI posted a positive return of 2.4 per cent in the most recent month, while South Korea's Kospi registered a sharp negative return of 22.2 per cent — a signal the report says could mark the beginning of a broader capital rotation.
Why Global Capital Bypassed India
The report attributes India's relative underperformance to a global pivot toward artificial intelligence-driven markets. Abakkus Investment Managers noted that global investors have redirected capital toward AI-led markets such as the US, Taiwan, and South Korea, leaving India's equity markets underweight despite solid domestic fundamentals.
'India's economic fundamentals remain strong with robust growth, healthy forex reserves, improving domestic demand, and policy continuity. However, global investors have shifted capital toward AI-led markets such as the US, Taiwan, and South Korea,' the report stated.
The Case for a Rebound
The firm forecasts that foreign institutional investors who recently booked profits in South Korea may redeploy capital into India over the next six to 12 months as AI-led trade dynamics reverse. Aman Chowhan, Head of Equities — Alternates at Abakkus Investment Managers Private Limited, said the country's underlying growth drivers remain intact.
'India's long-term investment case remains firmly intact. While global capital flows are currently being influenced by evolving technology-led opportunities, geopolitical developments and currency movements, the country's underlying growth drivers including demographics, consumption, formalization and infrastructure creation continue to strengthen,' Chowhan said, adding that periods of underperformance often lay the foundation for future opportunity.
Rupee and Structural Tailwinds
The report also identified structural factors supporting a potential rupee recovery. These include moderating dollar outflows as India's dependence on imported energy gradually declines, and Reserve Bank of India (RBI) initiatives such as FCNR schemes that bolster foreign currency inflows and external liquidity. The firm also highlighted India's diversified sectoral composition as a buffer against concentration risk, noting that no single sector dominates the market — a contrast to the technology-heavy profiles of South Korea and Taiwan.
With foreign flows beginning to show early signs of rotation and domestic fundamentals holding firm, the next six to twelve months will be a critical window for India's equity markets to reclaim their position among global investors' top allocations.
Point of View
But the timing call deserves scrutiny. Predicting FII rotation from South Korea to India within six to twelve months assumes the AI trade unwinds neatly — a significant assumption given that US and Taiwan tech cycles rarely reverse on schedule. India's diversified sectoral profile is a genuine differentiator, but it is also the reason global momentum capital overlooked it in the first place. The more durable question is whether India can attract long-duration institutional money rather than rotation flows, which tend to be as fleeting as the trends that displaced them.
NationPress
6 Aug 2026
Frequently Asked Questions
Why have Indian equities underperformed global markets recently?
According to Abakkus Investment Managers, India's underperformance is driven by sentiment and valuation factors, not macroeconomic weakness. Global investors have shifted capital toward AI-driven markets in the US, Taiwan, and South Korea, leaving Indian equities relatively underweight despite strong domestic fundamentals.
How much did the Nifty 50 return compared to global indices over the past year?
India's Nifty 50 TRI returned -0.4 per cent in the one year ending 30 June 2026. By contrast, South Korea's Kospi returned 103.2 per cent, Taiwan's TAIEX 83.2 per cent, Japan's Nikkei 56.7 per cent, and the US Nasdaq 20.1 per cent over the same period.
When could foreign investors return to Indian equities?
Abakkus Investment Managers forecasts that foreign institutional investors who recently booked profits in South Korea may redeploy capital into India over the next six to twelve months, as AI-led trade dynamics begin to reverse.
What structural factors support India's long-term equity case?
The report highlights robust economic growth, healthy forex reserves, improving domestic demand, and policy continuity as core strengths. It also cites India's diversified sectoral composition, declining imported energy dependence, and RBI initiatives such as FCNR schemes as structural tailwinds for both equities and the rupee.
Who at Abakkus commented on India's investment outlook?
Aman Chowhan, Head of Equities — Alternates at Abakkus Investment Managers Private Limited, said India's long-term investment case remains firmly intact and that periods of market underperformance often create the foundation for future opportunities.
