Bernstein: Indian Markets Not 'Underweight' Despite Challenges

• Bernstein's Rupal Agarwal advises against an "underweight" stance on Indian equities, suggesting a "neutral" position due to balanced risk-reward.
• Despite recent selling pressure on Dalal Street, wiping out ₹8 lakh crore, Agarwal highlights both challenges and positive tailwinds.
• Near-term challenges include stretched valuations, rising risk-premium, tough stock-picking, and lack of macro recovery.
• Positive tailwinds are strong earnings recovery, reasonable valuations, potential foreign capital return, and resilient domestic flow.
• Q3 earnings season has begun, with IT majors TCS and HCLTech kicking off Nifty 50 results next week.

Why It Matters: Bernstein's Rupal Agarwal recommends a "neutral" stance on Indian equities, balancing challenges with strong tailwinds.