Indian Equities Hit Record Highs as Inflation Tumbles and Valuations Reset: PL Asset Management
Mumbai: PL Asset Management, the asset management division of PL Capital Group (Prabhudas Lilladher), in their recent report ‘PMS Strategy Updates and Insights’, cited that Indian equity markets scaled fresh all-time highs in November, decisively outperforming global peers as a powerful combination of record-low inflation, resilient domestic growth and normalized valuations improved the risk-reward profile for investors. While global markets remained uneven — pressured by weakness in technology stocks, a cooling AI-led rally and soft macro data from China — India stood out as a relative bright spot, supported by strong domestic fundamentals and steady liquidity conditions.
Headline inflation emerged as a key driver of sentiment during the month. Consumer Price Index (CPI) inflation fell sharply to 0.25%, the lowest level on record and well below the Reserve Bank of India’s medium-term target of 4%. The sharp disinflation reinforced expectations of additional policy easing, providing meaningful support to equity valuations. Reflecting confidence in the domestic growth outlook, the RBI revised its FY26 GDP growth forecast upwards to 7.3%, while India posted 8.2% GDP growth in Q2FY26, reaffirming its status as the fastest-growing major economy globally.
Domestic activity indicators remained supportive despite global headwinds. Manufacturing PMI moderated to 56.6 amid tariff-related export softness but continued to signal healthy expansion. GST collections remained robust at ₹1.70 lakh crore, underlining the strength of domestic demand, while strong festive consumption further cushioned growth. Importantly, India’s current account deficit improved to 1.3% of GDP, helping maintain macro stability despite currency pressures and volatile global capital flows.
In contrast, global markets displayed growing signs of fatigue. The Nasdaq 100 declined during the month amid profit-taking in AI-linked stocks, while China and Hong Kong equities weakened on sluggish macro data and muted policy traction. Precious metals outperformed as investors sought safety, and crude oil prices softened ahead of expected rate cuts by the US Federal Reserve. Against this backdrop, India’s relative stability, predictable policy environment and domestic flow resilience helped it extend its outperformance.
Despite the strong rally in headline indices, PL Asset Management cautions that market participation remains narrow, an important theme highlighted in its quantitative indicators. Only 22% of stocks are outperforming the Nifty 50 on a 12-month basis, while just 28% of stocks are trading above their 50-day exponential moving average — both metrics sitting near historically depressed levels. Additionally, only 23% of stocks are generating positive rolling alpha, compared with a long-term average of 46%.
