Expert view: Subho Moulik, Founder and CEO of Appreciate, believes Indian investors should maintain and gradually build US exposure, skewed to high-quality cash-generative franchises and diversified funds. In an interview with Mint, Moulik said In a world of still positive growth, moderating inflation, and gradually normalising rates, maintaining a structurally pro-equity stance within investors’ risk bands remains sensible.
How do you see the recent dip in some of the top US tech stocks? Are concerns over a bubble in the US market valid?
The recent dip in leading US tech stocks looks like a healthy pause in an ongoing earnings-led bull market, not the end of the story.
US corporations are still delivering robust profit growth, with a large share of S&P 500 companies beating earnings and revenue expectations, underpinned by resilient US demand and sustained productivity gains from digitisation and AI adoption.
In that setting, pullbacks after strong runs usually reflect position unwinds and rate worries more than a collapse in fundamentals, and historically they have improved prospective returns for patient investors rather than signalling a structural break.
At the same time, multiple traditional warning signs are emerging: US valuations are near historical highs compared to the rest of the world, US equities account for nearly 60% of global market capitalisation, and a narrow group of mega-caps has driven a disproportionate share of index gains.
History shows that such phases of US exceptionalism are typically followed by periods where the rest of the world catches up, as relative earnings growth, the dollar, and sector leadership tend to mean-revert.
Crucially, however, these valuation gaps and concentration measures have had little predictive power in terms of 10-year forward returns.
What tends to drive outcomes is earnings and the macro cycle, and on that score, US large-cap tech and AI-linked franchises still sit on strong balance sheets, hold dominant competitive positions, and have self-funded capital expenditure plans. This paints a very different picture from a classic speculative bubble.
Is it the right time to buy US stocks, or should we wait for some correction?
For long-term investors, the key question is whether expected returns from US equities over the next decade remain attractive relative to cash and bonds.
The macro logic suggests they do. The US continues to exhibit decent real growth, moderating inflation, and strong corporate profitability. Most baseline forecasts anticipate mid- to high-single-digit earnings growth, with policy rates gradually moving toward a more neutral setting.
In such environments, history shows that disciplined phasing into the market – rather than trying to pick a perfect bottom – has delivered more reliable outcomes than staying in cash waiting for a deeper correction that may only be apparent in hindsight.
Valuation-based alarms are important context, but the evidence from long-term studies suggests that relative multiples alone have been poor timing tools.
US P/E premiums over the rest of the world have remained elevated for over two decades, yet US equities have continued to outperform as earnings and margins have stayed stronger for longer.
What has tended to mean-revert is relative earnings growth, not simple valuation gaps, and there is as yet little sign of a decisive US earnings rollover.
For Indian investors accessing US markets through funds or platforms, this suggests maintaining and gradually building US exposure, focusing on high-quality, cash-generative franchises and diversified funds, rather than trying to “wait out” indicators that can remain amber for years while the earnings machine continues to compound.
What does rising US bond yields mean for Indian stock market investors?
Rising US Treasury yields tighten global financial conditions, but the impact on Indian investors depends on the growth drivers behind the movement.
When yields rise mainly because US nominal GDP growth holds above 4%, it often signals confidence in the global economic cycle, though mechanical portfolio rebalancing out of emerging markets and near-term currency pressure can occur.
India now approaches such episodes with stronger external positions, including foreign reserves exceeding $680 billion and a domestic savings rate of around 30%, providing greater resilience.
From a valuation standpoint, higher US yields raise global discount rates and tend to cap equity multiples, but they also normalise risk premiums that were compressed by years of ultra-loose money.
This adjustment, combined with “exceptionalism” signals, can be constructive for long-term allocators.
For Indian equity investors, this means avoiding leveraged, rate-sensitive, purely liquidity-driven trades and instead using foreign flow-driven Indian market wobbles as opportunities to add to structurally strong Indian businesses, particularly those tied to global demand.
Does the US stock market correction make global diversification more attractive now?
Yes, this is exactly the kind of backdrop in which global diversification becomes more attractive, especially for India-heavy portfolios.
A pullback in US indices improves forward return potential by lowering entry valuations in the world’s deepest and most innovative equity market, even as profit growth remains supported by technology, healthcare and high-value services.
For Indian investors, that opens the door to buy into global growth engines that domestic indices still under-represent, while gaining long-term exposure to the US dollar as a natural hedge.
US equities have outperformed the rest of the world for more than a decade, but over the last half-century, about three-quarters of such 10-year runs were followed by the opposite, i.e. the rest of the world catching up as earnings, currencies, and sector leadership mean-reverted.
At the same time, simple relative P/E gaps have had little forecasting power, which means waiting purely for US valuations to “normalise” before diversifying could be like waiting for Godot.
The more robust approach is to steadily move toward a world-oriented allocation, with a meaningful but not dominant US weight, utilising US corrections as opportunities to build global exposure on more favourable terms rather than chasing or fleeing headlines.
How to adjust equity–debt mix amid the current market structure?
In a world of still positive growth, moderating inflation, and gradually normalising rates, maintaining a structurally pro-equity stance within investors’ risk bands remains sensible.
Over long horizons, equities continue to be the best asset class to outpace inflation, with both US and Indian corporates entering this phase supported by strong balance sheets, high margins, and solid earnings power.
For investors with 7-10 year horizons and reasonable drawdown tolerance, staying closer to the upper end of strategic equity allocation ranges across India, the US, and other developed markets makes sense.
Long-term studies show US outperformance tends to mean-revert through relative earnings and currency moves rather than abrupt multiple crashes, allowing investors to harvest the cycle by trimming top-performing assets and adding to laggards within a rules-based 60:40 or 70:30 equity–debt framework.
Rising yields also improve high-quality, short to intermediate-duration debt’s appeal as a shock absorber.
What are your expectations from the US Fed’s next policy move? How will it impact Indian investors investing in the US?
The Federal Reserve is likely to shift gradually from a restrictive to a more neutral policy stance, with inflation trending closer to the 2% target while growth stays positive.
Market expectations already embed a shallow, data-dependent easing path over the next 12–18 months, which has historically supported equities, provided soft landing narratives persist.
For Indian investors, Fed-driven volatility often serves as an entry-point generator rather than a structural threat.
Sudden shifts in rate expectations can trigger short-term corrections and factor rotations, especially layered on existing concerns about high US valuations and market concentration.
The tactical advice is to use Fed-related pullbacks, i.e. to gradually accumulate high-quality US exposure when rate fears and US exceptionalism concerns peak, while optimising currency moves to improve rupee entry levels.
The ongoing long-term appreciation trend of the US dollar versus the Indian rupee is expected to continue to add 3-4% of additional rupee returns for Indian investors in US assets over the next decade, which will continue to be an added incentive for Indian investors to increase US exposure long-term.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.