India not a buying opportunity yet; dividends may drive future returns: Rupal Bhansali

Indian equities may not yet offer a compelling entry point despite recent corrections, according to Rupal Bhansali, Founder, CEO and CIO of Double Duty Money Management, who believes valuations and earnings trends remain misaligned.

“I’m not convinced that India is a buying opportunity,” Bhansali said, cautioning that investor optimism alone cannot drive markets higher. “Markets don’t go up because you want them to… they have to go up based on fundamentals and valuations.”

She pointed out that the concern is not just pricing but also earnings momentum. The previous market cycle was marked by upgrades, but the recent period has seen downgrades while valuations remain elevated. Even after corrections in parts of the market, she stated that midcap stocks still trade at high multiples, creating the risk of disappointment if earnings fail to catch up with expectations.

Because of this backdrop, Bhansali expects equity returns to evolve. She believes the next phase of investing will rely less on price appreciation and more on income generation. “The next decade, dividends are going to take on the larger responsibility,” she said, stating that historically a significant portion of long-term equity returns has come from reinvested dividends. Dividends, she added, can act as a buffer in periods when markets deliver muted price gains.

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She also advised investors to reduce their home-country bias and diversify globally rather than concentrating portfolios in domestic equities. “I would actually make a call for diversifying and frankly looking at opportunities abroad,” she said, adding that investors often default to the United States, a market she is cautious about as well.

Bhansali stressed that outperforming markets requires taking positions different from consensus trades. According to her, crowded strategies reduce future returns because expectations are already reflected in prices. Investors should instead search for opportunities that are ignored or out of favour.

While she remains cautious on India in the near term, she outlined what could change her view. Structural reforms that boost employment and income creation would strengthen the long-term growth foundation. Labour market reform, she said, could be a turning point for the economy and a key trigger that would make her significantly more positive on Indian equities.

For the entire interview, watch the accompanying video

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