Indian stock valuations have significantly corrected, attracting investors

Indian stock valuations have corrected significantly, dropping from 24-25 times earnings to around 19 times for FY26 estimates. This shift makes current prices appear more reasonable, suggesting potential for foreign institutional investors to return in March. After six months of selling pressure, Indian equities may be stabilizing. Analysts note that while the market isn't at its lowest point, it is close, and earnings recovery will be crucial for future growth. Government spending is expected to increase, particularly in capital goods and infrastructure, which could boost economic activity. Despite recent volatility, long-term investment interest in India remains strong, with some sovereign funds increasing their allocations.