Rupee Weakens, India Equities Lag North Asia; Experts Advise New Strategy

• The Indian rupee is weakening due to significant foreign capital outflows from its bond market, despite a weakening dollar index.
• The RBI is intervening sporadically, seemingly comfortable with gradual rupee depreciation to support exports amid low domestic inflation.
• Indian equities struggle against North Asian counterparts due to currency instability and stronger earnings in other Asian markets.
• North Asian tech stocks, particularly chipmakers, are seen as attractive "AI enablers" with lower valuations compared to Indian IT services.
• Investment strategy for India includes marginal overweight, favoring private banks, consumer discretionary, industrials, and defense sectors.

Why It Matters: India's weakening rupee and FPI outflows dictate investment strategy against stronger Asian peers.