Indian markets slightly expensive but poised for long-term expansion: Kamal Ahmed

Synopsis

Kamal Ahmed shares insights on global capital deployment. Technology and defense sectors are seeing significant investment. India's economy shows strong long-term growth potential. Manufacturing is diversifying beyond IT services. This positions India as a key player in the global economic landscape.

In a wide-ranging conversation with ET Now, Kamal Ahmed, MD, Investment Bank, Barclays shared his outlook on the global economy, sectoral trends, and India’s long-term investment story. He highlighted how capital deployment worldwide is being reshaped by emerging themes like technology, artificial intelligence, and defence modernization.

“We are seeing a rapid deployment right now of capital across the world in the areas of technology and that is one thing that we are all very excited about. Sovereign AI is becoming an important theme for government investing and we are also seeing a tremendous focus on military and defence. So, those two sectors are benefiting a lot from government spending,” Ahmed said.

However, he cautioned that uncertainty persists over the global economic outlook amid the ongoing tariff situation in the US. “From an economic perspective, there is a fair amount of uncertainty around the global economic landscape given the tariff situation right now in the US… most economists are waiting to see where the tariffs ultimately land and what trade deals will get cut,” he noted, adding that these outcomes will shape future projections for GDP growth and inflation.

Speaking about sectoral performance, Ahmed said technology remains the undisputed growth leader. “The far and away the sector that is providing the most growth is the technology sector. And we see that this sector will continue to outperform and generate alpha for many-many years to come,” he remarked.

He also expressed optimism about the automotive sector’s comeback after a prolonged lull. “It is a market that has been depressed over the past several years and we think that part of that is because the transition to EVs has not been as quick as people expected... we think that market is now starting to come back and hopefully 2026 if we start to see economic growth return, we will start seeing resilience in that market as well.”

On monetary policy, Ahmed suggested the US Federal Reserve might still have room for limited easing. “I think that there is potential for further rate cuts… there may be one or maybe two additional cuts, I think that will provide a boost to the economy. However, if we do end up in a situation in 2026 where we have some slowdown in economic growth, it will be difficult to add additional stimulus because there is only so much you can reduce rates.”

Turning to India, Ahmed acknowledged current valuations but underscored the country’s enduring growth potential. “Indian markets are a bit expensive, but that is only because there is tremendous growth in the region and there is no doubt in everyone's mind that India is a long-term player in the global markets,” he said.

He added that India’s export engine is diversifying beyond traditional IT services. “We are starting to see major manufacturing companies like Micron set up operations in Gujarat and we think that there is going to be an emergence of high-tech manufacturing in India which will add another leg of growth and another leg to the stool of growth of the Indian economy,” Ahmed observed.

Ahmed described India as “a very exciting place to be right now,” reflecting growing investor conviction that the country is set to play an increasingly vital role in the global economic landscape.

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