India has gone from half-full to half-empty. That's excessive: Vincent Mortier

Benchmarks Nifty22,622.70-99.25FEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.71 % Invest NowFEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return19.29 % Invest NowEnter search text:

The Economic Times daily newspaper is available online now. Read Today's Paper India has gone from half-full to half-empty. That's excessive: Vincent Mortier, Group CIO, AmundiBy Nishanth Vasudevan, ET BureauLast Updated: Oct 12, 2026, 08:33:00 AM ISTSynopsis

Vincent Mortier, the chief investment officer of Amundi, reflects on the current state of Indian equities. He believes the recent decline in the market is a temporary issue related to negative narratives. Mortier identifies several potential catalysts for investment in India, including geopolitical resolutions and currency stabilization. He also discusses the intricate capital gains tax system affecting foreign investors' participation.

Listen to this article in summarized format

Loading...×The two-year weakness in Indian equities is a temporary pause as valuations are back to decent levels, said Vincent Mortier, group chief investment officer of Amundi, Europe’s largest asset manager. In an interview with Nishanth Vasudevan during a recent visit to Mumbai, Mortier, who oversees €2.3 trillion of assets worldwide, spoke about his outlook for India, the AI trade and US debt, among other topics. Edited excerpts:

How do you assess the outlook for Indian equities after two years of struggle?

Frankly, we were a little bit puzzled because India has been one of our convictions for many years. Today, India is unlucky in terms of narrative. So, there is the energy situation, tariffs and the perception that India, particularly its software companies, could be an AI casualty.

India used to be fashionable, attractive because of its prospects, the middle class, etc. Now the narrative has reversed. We went from half-full to half-empty. That’s excessive. India has never been very cheap, but valuations are back to very decent levels.

More importantly, the prospects of the country have not weakened. So, I think it’s a temporary pause, in a way. We continue to advise clients to buy Indian equities to diversify.

Live Events

As a global asset allocator, what do you think will bring foreign investors back to India?

There are a few catalysts. First, a resolution in Russia-Ukraine and the Middle East would send positive signals for South Asia and Europe.

Second is some concrete weaknesses in other markets. Today, asset allocations are very unbalanced. To rebalance, you need a catalyst. AI repricing can be a catalyst.

Third, we need to have the conviction that the Indian rupee has found a floor. The currency remains a big question mark. The cost of hedging is high, and there is still this feeling that all the gains you make in the market, you can lose on the currency.

Read more: ET Alpha Wealth Summit 2.0: What do Shah Rukh Khan and SIFs have in common? Radhika Gupta explains

So do you see further weakness in the rupee?

No. On a fundamental basis, when you look at valuation models, we don’t see why the Indian rupee should fall further. But then you have sentiment and flows. So, we need to wait for a catalyst. It’s just about timing.

Is India’s capital gains tax regime on equities one reason for foreign investors staying out?

It’s not the capital gains tax itself, but the complexity of the mechanism. The rules for foreigners are difficult, and even custodians sometimes struggle to compute the taxes.

What’s very important is stability. In many markets, foreigners are not taxed on capital gains by the country where they invest. They can be taxed by their home country. Dividends are taxed, but not capital gains. So, what investors don’t like is when things are unstable or difficult to predict.

What is your message to all the retail investors in India who are sitting on losses or maybe minor gains in the past two years?

The traditional 60-40 portfolio had the merit of simplicity, but I think investors need to think differently. What’s important is to build a core portfolio that generates quality income, whether from government bonds or stable, high-dividend equities.

The Indian 10-year yield is almost 7.3%, while inflation is around 4.5%. That means real rates are nearly 3%. It’s a very good deal. You can expect the 10-year yield to gradually decline to 7%, potentially even 6%.

Then you need equities for long-term growth, but diversification is crucial. Sometimes it’s better to forego a little extra return than take too much risk.

Many investors are calling the AI theme a bubble. Do you agree?

I don’t know whether we can call it a bubble, but it has some features of one. What is sure is that the market is too consensual, optimistic, concentrated and short-term. Normally, when you buy a high-growth company, you need to project earnings 10 years ahead. Here, the market reacts to short-term developments. It’s concentrated momentum and, in a way, speculative.

Among the 10 or 15 biggest companies in the sector, some will be big winners and others big losers. Yet the market is rewarding everybody. That’s too optimistic. When things normalise, whether because of declining earnings or financing issues, a lot of capital will be redeployed elsewhere.

Read more: Weekly Market Outlook: Nifty snaps 8-week losing streak, but can bulls reclaim the crucial 200-week moving average?

There have been concerns in equity markets over the spike in US Treasury yields. How do you read it?

When the US 10-year is at 5.25%, there can be two views. You can be optimistic and say it’s because the US economy is growing fast, and inflation expectations are also rising. You can also have a more pessimistic view: the 10-year US yield is at such a level because there are too many financing needs and competition between borrowers.

Realistically, the 10-year US Treasury, like other government bonds, is no longer a risk-free asset. There needs to be a risk premium. It’s also about supply and demand, with alternatives such as 10-year Japanese government bonds. The US used to enjoy the privilege of having the only reserve currency and the only liquid risk-free asset. The dollar is still dominant, but it’s no longer the only reserve currency.

Alot of commentary seems to be leaning towards the pessimistic view.

Overall, the US economy is overstimulated today, although I’m not sure the inflationary pressures will last very long. The job market is strong, but fragile. At the same time, the US government is running a deficit of 7.5%, which is quite a lot for an economy operating at full employment.

The government also has huge refinancing needs and is borrowing short-term to finance long-term requirements. That makes the level of interest rates crucial. The Fed funds rate needs to be well below the 10-year Treasury yield. Otherwise, refinancing will become far too expensive.

So I think there will be a kind of alliance between the Treasury and the Fed, because it will be in the interest of the US population and the economy. There will be significant pressure on the Fed.

The US government has $40 trillion of debt. They need to find people who are happy to fund that. I think what we will see more and more is more domestic buyers in the

US. In the coming years, I wouldn’t be surprised if the Fed resumes a form of quantitative easing because they will have no other choice.

Do you expect the US 10-year to go to 6%?

It might go to 6%, potentially. But it won’t stay there for a long time.

Coming to your home country, French bond yields are at their highest in 25 years. Are we seeing the return of bond vigilantes pushing back against economies with high deficits?

We have seen some widening of the spread, essentially linked to uncertainty around the budget and upcoming elections. Investors already holding lots of French bonds cannot buy much more. Higher spreads are needed to trigger demand.

Short-term investors have also been shorting French debt. The spread to Germany touched 152 basis points last Friday. Investors began weighing the likelihood of the spread widening further to 200 or 250 basis points against the possibility of it narrowing. It’s a normal repricing of uncertainty that will last. Elections are only in May next year. We won’t have clarity before March or April.

Within Asian markets, which are your favourite markets?

India and Indonesia. Indonesia has been hammered, but fundamentals and megatrends remain good. China also offers opportunities at attractive valuations, although it’s a complex market. Japan is expensive and volatile.

Korea and Taiwan are heavily concentrated in semiconductor companies. Buying Korea is effectively buying two stocks. Investors need to understand this concentration and diversify.

Any thoughts on gold? It hasn’t moved much of late.

Gold is one of the few assets that can provide a good hedge against currency debasement risks and help preserve purchasing power. We believe this global trend will continue.

Gold is not particularly good as a hedge against geopolitics or even inflation. Whenever you get a pullback in gold prices, it can be a good opportunity to buy gradually and average your purchases.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onVincent MortierIndian equitiesAmundiUS Treasury yieldsUS economyforeign investors India

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...moreless
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onVincent MortierIndian equitiesAmundiUS Treasury yieldsUS economyforeign investors India

(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition

• Onion inflation at 108%? Yes, but not really. What is different this time?

• Curbing rupee bets: What the RBI’s new rules mean for the hedge-now-or-wait question

• Brinjal, buffalo, bacteria: Inside India’s pay-for-nature system

• Homebuyers wait as NCLT panel picks holes in unfinished Jaypee projects

• The NBFC saga - Part 3: How one default in 2018 changed the way RBI reads risk

• Four rules made HDFC Bank a compounder. All four have stopped. Can the new CEO rewrite them?

• 1
• 2
• 3

View all StoriesContinue reading with one of these options:Limited AccessFreeLogin to get access to some exclusive stories
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Login using your ET Prime credentials to enjoy all member benefits

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Big Price Drop! Flat 40% Off

Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail OfferAvail OfferClaim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '

' + h3 + '

' + h4 + '

' + listing + '

'; $('#paidSCWidget').html(html); var callback = $('#paidSCWidget').attr('data-callback'); if(callback && window[callback]) { window[callback](); } customDimension.dimension72 += ' | Shown SYFT no Trial_With Missed Paywalled Articles Collection'; } else { _processNormal() } } }); } else { _processNormal(); } } catch (e) { _processNormal(); } }, function () { _processNormal(); }); //console.log('storyCollectionLoad', $); }

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with
in-depth insights that matter

• Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

  What Adani’s US indictment means for India Inc’s overseas fundraising

• Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

  Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?

• Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

  The problem with lab grown diamonds

• Why a falling rupee is a better option for the economy

  A list of top 20 momentum stocks that have delivered massive returns in one year

2Invest Wisely With Smart Market Tools & Investment Ideas

Alpha Trade

Get daily trade ideas from SEBI-registered research analysts.

Investment Ideas

Grow your wealth with stock ideas & sectoral trends.

Stock Reports Plus

All-in-one stock research with Stock Score, peer comparison & key signals.

BigBull Portfolio

Get to know where the market bulls are investing to identify the right stocks.

Stock Analyzer

Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.

Market Mood

Analyze the market sentiments & identify the trend reversal for strategic decisions.

Stock Talk Live at 9 AM Daily

Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.

3Stay informed anytime, anywhere with ET ePaper

ePaper - Print View

Read the PDF version of ET newspaper. Download & access it offline anytime.

ePaper - Digital View

Read your daily newspaper in Digital View & get it delivered to your inbox everyday.

Wealth Edition

Manage your money efficiently with this weekly money management guide.

TOI ePaper

Read the PDF version of TOI newspaper. Download & access it offline anytime.

Deep Explainers

Explore the In-depth explanation of complex topics for everyday life decisions.

Health+ Stories

Get fitter with daily health insights committed to your well-being.

Personal Finance+ Stories

Manage your wealth better with in-depth insights & updates on finance.

5Enjoy Complimentary Subscriptions From Top Brands

Stream new documentaries from all across the world every day.

Stories you might be interested in