Understanding the Equity Market in India

1. Understanding the Equity Market in India The equity market in India is often described as expensive, crowded, or overowned. None of those labels is wrong, but they’re incomplete. For global allocators, India isn’t a trade; it’s an asset class with its own structural return drivers, risks, and premiums. Understanding it properly means stepping away from retail narratives and looking at how capital compounds in this market. What Makes the Indian Equity Market Different India’s equity market has matured rapidly over the last decade, but it doesn’t behave like other emerging markets. ● Broad participation across domestic institutions, retail, and foreign capital ● Deep liquidity in large caps, uneven liquidity below the top tiers ● Strong earnings visibility driven by domestic consumption and capex cycles ● Structural reforms that impact profitability over multi-year horizons ● Market infrastructure leadership, with T+1 settlement live and India now the global test case for T+0 settlement, gives an edge in capital velocity and operational efficiency This combination explains why equity market India valuations often sit above EM peers. You’re paying for durability, not speed. The Reality of Equity Investing in India Equity investing in India rewards patience more than precision. ● Sustainable returns come from earnings growth, not multiple expansion ● Cyclicals and defensives rotate sharply with policy and liquidity shifts ● Governance dispersion is wide, especially outside benchmark names ● Alpha is often found in governance arbitrage pricing the gap between reported numbers and actual capital discipline ● Stock-level alpha exists, but only with strong downside control

2. For allocators, investing in equities here is less about timing entry points and more about staying invested through volatility without style drift. Where the India Premium Comes From India trades at higher multiples for reasons that matter to long-term capital. ● Domestic savings provide a stable capital base ● Faster settlement cycles (T+1, moving toward T+0) improve capital efficiency and reduce counterparty risk ● Policy continuity reduces tail risk relative to other EMs ● A large, listed opportunity set across sectors and market caps The premium persists because exits are reliable, liquidity is real, and drawdowns tend to be cyclical rather than structural. Identifying Real Investment Opportunities The best investment opportunities in India rarely sit at extremes. ● Market leaders with pricing power during inflationary cycles ● Under-researched mid-caps with institutional-quality governance ● Businesses aligned with formalisation, digitisation, and capex recovery ● Managers who understand when not to be fully invested This is why manager selection matters as much as asset allocation in Indian equities. Conclusion Understanding the equity market in India requires moving past headlines and into structuring how capital flows, how businesses scale, and how risk is absorbed across cycles. For investors accessing India through a structured, long-term lens, vehicles like the Vedas Opportunities Fund may fit within broader allocations when governance, liquidity, and mandate alignment are clearly defined, serving as exposure, not speculation. Equity investing here rewards discipline, local insight, and portfolio construction more than tactical calls.