Bombay Stock Exchange – 150-year anniversary

The Bombay Stock Exchange (BSE) in India, Asia’s oldest, celebrated its 150th anniversary on April 17, 2025, marking a century and a half since its 1875 founding by Premchand Roychand. The BSE remains the world’s largest stock exchange by number of listed companies that today exceeds 5,500. This compares to around 1,660 on the London Stock Exchange.

The BSE has a close cousin – the NSE (National Stock Exchange of India), which was founded in 1992. It has stricter listing requirements which results in a smaller but generally more established and actively traded pool of companies. Together the BSE and NSE are home to over 7,500 listed companies.

Emerging retail investor dominance

Since the pandemic, the NSE has added 16 million new investors every single year. As of November 2025, there were more than 130 million unique investors – that’s triple the amount compared to six years ago. Retail investors now hold roughly 19% of the entire NSE’s market cap – the highest in 22 years.

A significant driving force is the popularity of India’s investment vehicle, the Systematic Investment Plan (SIP). What started as a niche financial product in the 1990s, has now matured into a national cultural phenomenon and is the definitive wealth-creation tool for millions of Indian investors.

To highlight this success, monthly contributions reached $3,464 million in November 2025, marking an 11% increase in just nine months.  This momentum over time has translated into a colossal ecosystem that now manages over $194 billion in assets, underpinned by a vast and growing network of over 94 million active accounts.

Driving this growth is a significant demographic shift and secular growth in India’s middle class. Nearly 40% of NSE investors are now under the age of 30, a dramatic rise from just 23% in 2019. As the world’s most populous nation with a median age of just 28.4 years, India is benefiting from structural investment flows that is expected to continue support the Indian equity market.

Stock picker’s paradise

India is a ‘stock-picker’s paradise’ due to its massive breadth of 5,500+ listed entities and high liquidity (averaging US$ 10–12 billion daily). Crucially, the low correlation with the U.S. (0.17 vs S&P 500) offers a rare combination of vast, uncorrelated and liquid stock picking opportunities.

Phoenix Mills – retail-led urban development. Phoenix Mills is India’s largest retail-led, mixed-use developer. It has exposure across the entire real estate space, including retail malls, entertainment complexes, commercial spaces, and hospitality. Phoenix’s sustainable competitive advantage is supported by its large, diversified portfolio of prime retail-led assets and strategic long-term partnerships with global high-street brands, which drive superior footfall and industry-leading rental yields. The company benefits from several structural growth drivers such as increasing discretionary spending, rapid urbanisation and a rising middle class. India also benefits from extremely low mall penetration of just 0.5 square feet of retail sales area for grade A malls (which is lower than Indonesia, the Philippines and Vietnam). Its share price is up 317% over the five-year period ending January 2026.

Lemon Tree Hotels – riding India’s hospitality boom. Lemon Tree Hotels is India’s largest hotel chain in the midscale segment. Its success is thanks to an aspirational shift towards branded hotels, aided by secular growth in domestic travel, higher disposable incomes and improving transportation. The investment thesis is driven by a dramatic supply-demand mismatch; as Hilton’s CEO noted, India has fewer total branded hotel rooms than the city of Las Vegas alone. Domestic demand is projected to grow at 9.7%—significantly outstripping a 5.9% supply growth over the next five years. Its share price is up 207% over the five-year period ending January 2026.

Mahindra & Mahindra Financial Services – the Financial Engine of Rural India. M&M Finance is a leading Indian Non-Banking Financial Company (NBFC) that serves as the financial backbone of the Mahindra Group. It caters to the rural mass market with a vast network across the country, reaching over 480,000 villages. The company benefits from two of our themes: a sustainable competitive advantage in its substantial scale and reach, and a monetisable structural growth opportunity where financial services remain in short supply.

Growth opportunities include the “premiumisation” of rural India, where demand is shifting from a value-driven to an aspirational market. For example, individuals moving from a basic motorcycle to an entry-level car. Its share price is up 111% over the five-year period ending January 2026.

Polycab – wired for growth. Polycab is the largest manufacturer of cables and wires in India. This market is highly fragmented, with unorganised, small-scale players holding nearly 35-40% of the market. Stricter quality regulations (like BEE and BIS standards), the implementation of GST (consumption tax), and increasing brand consciousness among consumers have shifted demand toward organised players such as Polycab. The company benefits directly from the government’s massive push in public infrastructure spending. The wire and cable industry is expected to grow at 1.5x to 2x of real GDP growth. Its share price is up 484% over the five-year period ending January 2026.

Capturing this opportunity

We focus on long-term structural growth themes, such as digitisation and domestic consumption, with roughly half of our holdings situated in the under-explored small and mid-cap space. This focus on the ‘hidden’ 5,500+ universe provides us with a differentiated and uncorrelated source of alpha.

We believe the ideal environment for active management requires scale, diversity, and structural tailwinds. That’s the case of the Indian stock market, where you can find a wealth of securities that have the potential to deliver higher returns than the market. Driven by a powerful entrepreneurial surge and a robust economy fuelled by domestic factors, rather than global volatility, India has evolved into one of the most compelling markets globally for active stock selection.

 

SOURCES:

BSE and NSE, as of 2025, The Economic Times as of 27th December 2025, Bloomberg as of 31st December 2025, Hilton as of January 2026, company data (for Mahindra & Mahindra Financial Services, Polycab and Phoenix Mills, as of 2025).

What will drive the Indian market in 2026?

Following the largest underperformance of India versus Emerging Markets in three decades (in USD), Mike discusses:

  • Latest signals from Indian companies and consumers – the key takeaways from his meetings in Delhi, Kanpur, Bangalore and Mumbai
  • The market and macro backdrop for Indian equities in 2026
  • Alquity’s highest-conviction sectors and companies

You can watch the webinar here:

And you can download the slides here: https://alquity.com/wp-content/uploads/2026/03/Alquity-Webinar-What-will-drive-the-Indian-market-in-2026-March-2026.pdf

FOR PROFESSIONAL INVESTORS ONLY.

 

Rethinking Cement: Balancing development and sustainability in India

Why sustainability needs context

 

At Alquity, we believe that true sustainability requires being rational and evidence based whilst maintaining core values. For vast populations in the developing world, the alternative to cement is not a greener life, but a precarious one; vulnerable to extreme weather and lacking basic sanitation. We must ensure that the drive toward net zero is sustained in such a way that millions are not inadvertently condemned to inadequate living conditions. India serves as a prime example of an economy where the context is important to understand and reflect in investment decisions.

According to the most recent National Family Health Survey (2019-2021), nearly 40% of rural Indian households resided in “semi-permanent” or “kutcha” structures (houses made of mud, straw and unburnt brick that frequently wash away in the monsoon). In the cities, the situation is equally critical; Knight Frank estimates point to an urban housing shortage of nearly 10 million units, forcing families into informal slums.

Furthermore, according to Government estimates, the country faces a $1.4 trillion infrastructure deficit to provide basic connectivity, hospitals and sanitation.

Even the energy transition relies on this material; a single onshore wind turbine (3 MW) typically requires roughly 800 tonnes of concrete for its foundation. However, recognising that cement is essential does not mean we accept a blank check for pollution. Because sustainability is paramount, we ensure that high-risk sectors like cement are subject to our most stringent ESG standards.

Furthermore, the wider industry is materially less polluting than it was a decade ago. This is the result of a combination of technological advances, stronger ethical and environmental awareness (at the company, shareholder, and country level), and rational self-interest.

UltraTech – ‘Cleaner’ cement, stronger economics

 

Within the Alquity India Fund, our cement holding is UltraTech, which we believe exemplifies regional best practice within the industry. We also invest in housing finance companies (such as Aptus Value Housing Finance) to support and capture growth in this area, in line with SDG 11 (sustainable cities and communities) and SDG 6 (sanitation). We consciously prefer UltraTech to pure construction companies – as it allows us to support essential infrastructure and housing development while avoiding the significantly higher risks of bribery and conflicts of interest often inherent in the construction bidding and tendering process.

Firstly, it is important to note that UltraTech is aiming to decouple cement production from coal. Cement manufacturing is an energy-intensive process, and hence electricity consumption is significant. UltraTech has committed to sourcing 85% of its total electricity from green sources by 2030 (up from 42% today and from just 10% five years ago). This is not only about reducing emissions in line with the company’s ambitious targets (UltraTech aims to reduce Scope 2 emissions by a further 75% over the next six years); it is also about unit economics.

Grid and coal-based power often cost the company ~INR7.0 per unit whereas power generated from UltraTech’s Waste Heat Recovery Systems (which capture exhaust heat from kilns to drive turbines) costs roughly INR0.8 per unit and generate zero incremental emissions. Solar power costs around INR4.6 per unit. Every percentage point of electricity shifted from grid or coal-based sources to internal green generation directly expands EBITDA margins (up to 200 bps by 2030 assuming the cost of grid power remains the same). With over 1 GW of green capacity currently being deployed (and expected to be doubled by the end of the decade), and approximately one-third of annual capex allocated to new WHRS installations to improve efficiency and cut emissions, UltraTech is building a structural cost advantage that Indian peers still reliant on the coal-heavy grid cannot replicate.

Beyond electricity, a frequently misunderstood value and decarbonisation driver in the sector relates to clinker. Clinker is the high-carbon, high-cost input produced in kilns, and “greening” cement largely means reducing clinker content by substituting alternatives such as fly ash or slag. UltraTech currently operates at a clinker conversion ratio of 1.48x, meaning one tonne of clinker produces 1.48 tonnes of cement, with a target of 1.60x or higher. Achieving this would allow the company to produce roughly 8% more cement without constructing a single new kiln. Given that a new kiln costs over $150 million and takes around three years to build, improving the clinker factor effectively creates “free” added capacity (reducing CapEx requirements), and lowers carbon intensity by roughly 10%.

India’s thermal (coal) power plants generate approximately 340m tonnes of fly ash each year as per India’s Central Electricity Authority. Historically, much of this ash was dumped in ash ponds, which are estimated to occupy over 40,000 hectares of land nationwide. Each tonne of fly ash used in cement permanently encapsulates waste that would otherwise contaminate groundwater. An additional, often overlooked benefit is that fly ash can improve concrete performance in many applications, extending the lifespan of infrastructure such as bridges and hence, reducing long-term emissions. Financially, fly ash is significantly cheaper than manufactured clinker, lowering the variable cost per bag while reducing Scope 1 carbon intensity by a further 7.5%+ if the medium-target ratio of the company is achieved.

Another pillar of the environmental improvements in the sector is the Thermal Substitution Rate (TSR): the ability to replace coal or petcoke with waste being used as an alternative fuel (e.g. plastic, agricultural waste or municipal waste). While global leaders operate kilns with over 50% waste substitution, Indian producers have historically relied on coal, largely due to supply-chain challenges and very poor waste segregation compared with Europe. UltraTech has been aggressively scaling its TSR over the past decade and spent approximately INR4.6 billion last year on CapEx for these initiatives. In the Indian context, given the lack of recycling and proper disposal systems, we believe this is a net positive outcome. While burning plastic generates carbon emissions, it is less carbon-intensive than coal and materially better than the alternative, as plastic pollution is a severe issue in India. If not burnt (or recycled), waste plastic would find its way in rivers and oceans, sit in landfills where it degrades into microplastics and contaminates groundwater, or be openly burned (a common practice in the country) which releases toxic black smoke. By contrast, processing and burning plastic in UltraTech’s kilns significantly mitigates the release of harmful toxins such as dioxins and furans.

UltraTech’s Scope 1 emissions of 549 kg CO2/t outperforms the global average (600–635 kg/t) and are almost on par with global giants Holcim (543 kg/t) and Heidelberg (534 kg/t). Crucially, UltraTech has achieved this parity largely through product efficiency rather than fuel switching. While peers rely on a TSR of 50%+ in Europe to drive down emissions, UltraTech operates at just a 6% TSR. When including Scope 2 emissions (approx. 13 kg CO2/t), UltraTech continues to demonstrate industry-leading efficiency, compared to the global cement average Scope 2 intensity of approximately 35–40 kg CO2/t and placing it on par with global leaders like Heidelberg.

Water Stewardship

 

The company’s stewardship and operational resilience also extend to water, a resource under acute stress across the Subcontinent and one we actively monitor and engage actively with our holdings about. While cement is typically a net consumer of water, UltraTech has engineered its operations to give back significantly more than it takes, achieving water positivity of approximately 5x. In FY25, the company harvested over 110 million kilolitres.

For example, in Madhya Pradesh (a region that was water-scarce a decade ago) UltraTech did not simply drill wells, but constructed 67 water-harvesting structures and check dams. Today, water tables have risen sufficiently for local farmers to shift from subsistence farming to higher-value crops such as garlic and chia seeds. Biodiversity has also progressively recovered, with certain species (birds) returning to the area.

As we can see on the chart below, over the past four years, the company’s water intensity has declined over 24%.

Conclusion

 

Whilst cement has always been critical for India’s development, the environmental impact has dramatically diminished over recent years. We view this as a significant change. With Ultratech, we are backing a management team that views sustainability not as a compliance exercise or box-ticking exercise, but as both a necessity and the primary lever of operational efficiency.

 

SOURCES:

UltraTech, data as of Q2 FY26; Holcim and HeidelbergCement, latest available data based on 2024 Annual Reports; GCCA, IEA, WRI, Global Averages, as of 2024; National Renewable Energy Laboratory, wind energy cement estimates as of May 2023; CEA, report on fly ash generation and utilisation in thermal power stations as of FY25; Ministry of Health and Family Welfare, national family health survey as of FY2; Knight Frank India demand-supply assessment as of December 2024.

Emerging Markets in 2026: Outperformance for many, but further disappointment for India?

Key highlights from the webinar: 

    • Korea Tech Surge: Emerging markets outperformed developed markets in 2025, driven by Korea, material and tech sectors.
    • Emerging Markets Win: Emerging markets are expected to continue outperforming developed markets in 2026, with a weaker dollar and higher earnings growth.
    • Top Investment Picks: India, the Philippines, Egypt, Vietnam, and small caps are highlighted as top investment opportunities for 2026. India is Mike’s top pick given the dichotomy between fundamentals and market performance.
    • AI Focus Shift: AI spending will remain significant, but further valuation re-rating is unlikely; focus shifts to smaller names benefiting from AI.
    • Oil Price Boost: Lower oil prices will benefit oil-importing emerging markets, boosting consumer sectors and domestic growth.

You can watch the webinar here:

And you can download the slides here: https://alquity.com/wp-content/uploads/2026/02/Alquity-Webinar-January-2026.pdf

 

FOR PROFESSIONAL INVESTORS ONLY.

The Indian Rupee and the Path to Stability

The rupee: volatility and structural context 

 

The Indian rupee experienced a volatile 2025, depreciating by 4.8%, 15.7% and 11.3% against the US dollar, euro and pound respectively. Historically, a depreciating rupee (as with most emerging market currencies) against major pairs such as the dollar or euro is not unusual; for example, rupee depreciation vis-à-vis the dollar has averaged around 3% per year.

Importantly, a controlled depreciation can offer key advantages for an emerging economy such as India, supporting export competitiveness and discouraging excessive imports, thereby encouraging domestic import substitution and strengthening resilience to external shocks. However, an overly sharp depreciation could inflate the cost of essential imports, necessitate costly FX market intervention and prompt higher interest rates to defend the currency.

In our view, the rupee’s weakness in 2025 was driven by transitory factors, including foreign equity outflows and stalled trade negotiations with the US. The FX market appears to be overlooking the structural India is undergoing, as we outline below, which should result in reduced pressure on the currency both in the short and medium term.

Trade transformation

 

India is a trade-deficit country, although this is largely (but not entirely) offset by a substantial services surplus ($188.6 billion in FY25), driven predominantly by IT services. Furthermore, India’s share of global trade has been steadily increasing, as illustrated in Figure 2.

India’s export footprint is firmly oriented towards Western markets, with exports to Europe ($98.4 billion) and the US ($86.5 billion) now dwarfing those to China ($14.3 billion). This is supported by a diversified goods export basket, led by petroleum products (14.5% of FY25 exports), telecom instruments (6%), and pharmaceuticals (5.5%) as shown in Figure 3.

Imports remain primarily linked to energy and gold: crude oil accounts for 19.9% of FY25 imports, gold for 8.1%, and coal for 4.3% as shown in Figure 4.


Despite India’s historic dependence on imported hydrocarbons, a structural transformation is now underway. In a milestone achievement aligned with COP26 objectives, 50% of India’s installed power generation capacity was sourced from non-fossil fuels in June 2025, reaching its Paris Agreement (NDC) target five years ahead of the 2030 schedule. India is therefore reducing its exposure to the volatility of fossil fuel imports and moving towards greater energy self-sufficiency, materially lowering its import burden. This is supportive of the rupee over the medium term.

In January 2026, India concluded a landmark free trade agreement with the EU, representing a transformational opportunity for the economy. The deal creates a unified market of nearly two billion people and a combined economic size of approximately $27 trillion. It is expected to act as a catalyst for growth, with both sides targeting a $200 billion bilateral trade milestone by 2030, fundamentally reshaping flows of goods, services and investment between the two regions.

In addition, coming just one week after the historic India-EU Free Trade Agreement, the long-awaited India-US trade deal was finally concluded. In a swift reversal of events, the US agreed to lower reciprocal tariffs on Indian imports from 25% to 18% while completely removing the 25% punitive levy related to India’s Russian oil purchases. This thirty-two-percentage point reduction significantly bolsters the competitiveness of Indian exports and effectively removes the uncertainty that was weighting on investor sentiment. By removing this headwind, the agreement is poised to transforms the outlook for export-oriented sectors and should act as a trigger for renewed foreign capital flows. These agreements, and following smaller recent deals with the UK and other countries, should further strengthen the rupee’s long-term outlook, particularly given India’s existing trade surplus with the EU (approximately $15.2 billion).

The gold factor

 

India’s cultural affinity for gold has resulted in an estimated $3.8 trillion of household gold ownership – equivalent to around 89% of national GDP and nearly four times the official reserves of the United States. While gold’s sharp price appreciation has boosted household wealth, it has also intensified macroeconomic pressures: gold imports grew by 27.4% year on year in FY25, accounting for 8.1% of total imports, up from 6.7% in FY24.

Despite this headwind to the current account, a structural rotation is underway as the economy continues to financialise. Equity allocations rose to a record 15.1% in FY25, nearly doubling from 8.7% just a year earlier. While gold remains a cultural investment staple, we expect its share of overall household savings to gradually decline as equity participation continues to rise.

Capital flows – a key trigger of rupee weakness in 2025

 

India runs a current account deficit, which is financed through foreign capital inflows. Recently, India’s sovereign debt market entered a new phase of global integration following its inclusion in J.P. Morgan’s Emerging Market Bond Index in 2024 and a planned inclusion in Bloomberg’s flagship Global Aggregate Bond Index in 2026. This has boosted foreign participation in the debt market, with overseas holdings of Indian sovereign debt rising from $20.1 billion in September 2023 to $42.8 billion today.

Despite this, foreign equity flows have recently turned negative. As illustrated in Figure 6, in 2025 foreign institutional investors (FIIs) recorded their largest annual equity outflows on record, totalling $18.8 billion. In our view, this largely reflected “hot money” rotating towards AI beneficiary markets such as China, the US, Korea and Taiwan. These capital outflows were further exacerbated by a slowdown in trade negotiations with the US, followed by an increase in US tariffs on Indian imports to 50%.

In response to rupee depreciation, the Reserve Bank of India (RBI) has adopted a largely measured approach to currency management, rather than aggressively deploying India’s substantial foreign exchange reserves of approximately $700 billion.

Domestic growth and greather INR stability

 

India’s long-term export outlook has been materially strengthened in recent years by a combination of structural reforms and targeted industrial policy. In November, the government announced sweeping, long-awaited labour code reforms, consolidating twenty-nine existing laws into just four and creating a far more flexible and formal legislative environment. These reforms have reinforced the 2020 Production Linked Incentive (PLI) scheme – a cornerstone of the ‘Make in India’ initiative launched in 2014 – designed to position India as a global manufacturing hub through targeted subsidies and export support.

The effectiveness of this approach is reflected in India’s eightfold increase in electronics exports over the past decade. Export momentum is further supported by an accelerating domestic growth backdrop: Q3 GDP growth of 8.2% significantly exceeded consensus expectations, with FY26 projections now positioning India as the world’s fastest-growing major economy for a fourth consecutive year.

The narrowing valuation premium relative to emerging market peers, alongside multi-year low inflation and accelerating economic growth, creates an attractive environment for capital inflows. In our view, this should support a reversal of the rupee’s accelerated depreciation trend observed in 2025.

 

Conclusion

 

Despite the volatility experienced in 2025 – which we attribute to transitory trade frictions and capital outflows – India’s underlying structural growth momentum remains intact. India’s transition towards renewable energy, landmark trade agreements such as the EU–India/US India FTAs, and manufacturing reforms under the PLI scheme are collectively strengthening the country’s long-term trade balance.

Coupled with India’s position as the world’s fastest-growing major economy and increasing bond market integration, we expect foreign capital flows to improve. Consequently, we anticipate rupee depreciation to stabilise towards historical norms as the year progresses.

 

SOURCES:

Deutsche Bank Research & HSBC (January 2026) for Figures 1, 2, and 3; Bloomberg, Morgan Stanley (January 2026) for Figure 6; Motilal Oswal and Goldman Sachs (January 2026) for Figures 7, 8, 9 and 10; Jefferies (28 January 2026); Times of India, “India’s love for gold” (October 2025); Google Finance (as of 30th January 2026) for Figure 5; Government of India (2025); Nirmal Bang, Beyond Market Issue 235 (2025).

Why investors may want to consider India?

The mantra is always ‘it’s not about timing the market, it’s about time in the market’. And for good reason. Less experienced investors can be swept up in the noise and end up investing in a company or strategy closer to its peak than a trough.

There are, however, periods when an investment case is particularly strengthened. We would argue that the current structural and economic backdrop supports a long-term investment case for Indian equities.

A structural growth advantage

India’s population profile points to sustained economic expansion. Now the most populous country in the world, the median age in India is 28.4 years compared with China’s 38.4 years[1].

India’s youth is the engine behind its multi-decade growth trajectory, which is being driven by rising consumption, urbanisation and digitalisation.

This is reflected in its GDP growth, which rose 9.2% in 2023, 6.5% in 2024 and is forecast to hit 6.6% in 2025, according to the International Monetary Fund (IMF). Compare this with developed markets such as the US and the EU, which are on course to deliver 2% and 1.4% next year, respectively[2].

Tailwinds and momentum

Several tailwinds emerged during 2025, including the Reserve Bank of India (RBI) cutting interest rates by 125bps to 5.25%. Cuts were also made to income tax and the goods and services (GST) tax[3], and inflation reached a multi-year low (0.25% in October, year on year).

S&P upgraded India’s sovereign credit rating to BBB in August 2025, marking the country’s first upgrade since 2007[4].

Third quarter GDP growth emphatically beat expectations, delivering 8.2% ahead of the predicted 7-7.5%. It follows stronger than anticipated growth of 7.8% in Q2 and 7.4% in Q1[5], putting the economy on course to exceed the IMF’s 6.6% forecast for 2025.

In a further development, long awaited labour laws were enacted in late November reducing 29 federal laws to just four simplified codes. As a result, instead of 1,400 labour governance rules, companies will now only need to comply with around 350. The regulatory burden on businesses has also been lightened, with the number of forms companies are required to complete reduced to 73 from 180[6].

Additionally, India’s historical valuation premium has narrowed significantly compared with other emerging markets, which creates a more attractive entry point[7].

The Indian stock market has had a challenging run in 2025[8]. Companies saw earnings downgrades; despite the economy being well-insulated from Trump’s tariffs due to the US representing such a small percentage of total Indian exports[9].

But sentiment is improving. The government’s reformist zeal has returned, the earnings downgrade period is over and the rhetoric around tariffs has softened. As a result, expectations are rising ahead of 2026[10].

Out of index opportunities

India’s equity universe is one of the broadest and most diverse. Its two primary stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE), collectively host around 7,700 companies[11]. Yet the most widely tracked indices represent a fraction of this opportunity. The narrower indices cover <0.4% and the broader benchmarks <6.5% of listed names.

This creates significant scope for active managers to uncover mispriced securities that currently sit outside of the indices.

Indian equities also exhibit low correlation when compared with global indices, such as the S&P 500 (0.18) and MSCI World (0.30)[12]. The benefit this offers investors is lower overall portfolio volatility when combined with developed market exposures.

In short, we believe India combines scale, diversity and inefficiency, making it one of the most compelling markets, globally, for active stock selection.

How Alquity India is positioned to capture this opportunity

An experienced team: Our investment team has worked together for six years. It is led by Mike Sell, who has 30 years’ experience of investing in India.

Distinct portfolio construction: We focus on structural themes, such as digitalisation and domestic consumption. Approximately, half of our holdings sit outside the main index, as our team targets under-researched small and mid-cap companies as a differentiated source of alpha.

Governance: Our team seeks companies with high governance standards, and we avoid sectors that have demonstrated misalignment with minority shareholders[13].

Proven track record: Over 10 years, the Fund (I share class, USD) has delivered a 150.5% cumulative return, ranking in the 1st quartile and 14th percentile within the Lipper Global Equity India peer group, outperforming 86% of comparable funds. The Fund exceeded the India Index (+145.4%), the peer group average (+140.8%), and significantly outpaced major ETF alternatives such, as the India iShares ETF (+113.0%)[14], whose returns reflect the provisioning for capital gains tax – a drag not applied to the index but accrued by the Alquity India Fund.

The performance shown is based on the I class charging structure with an OCF of 1.0%. We have used the track record for the USD M class since 30th April 2014 and the USD Y class since 29th June 2017 and added back 1% per annum up until the launch of its GBP I class (12th November 2019) and converted to USD up until 13th August 2024 when the share class was launched. Actual results will vary from the analysis. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance. Currency exchange rate movements can lead to an increase or decrease in the value of the fund’s investments.

 

SOURCES:

[1] Source: United Nations, January 2023

[2] Source: IMF, October 2024

[3] Source: RBI, Bloomberg, October 2025

[4] Source: S&P Global, August 2025

[5] Source: Financial Times, November 2025

[6] Source: BBC, November 2025

[7] Source: Bloomberg, October 2025

[8] Source: Bloomberg,

[9] Source, Bloomberg, November 2025

[10] Source, Bloomberg, November 2025

[11] Source: NSE and BSE

[12] Source: Bloomberg, September 2025

[13] Source: Alquity, November 2025

[14] Source: Alquity, Bloomberg, Lipper, as of 31st October 2025.

India: A stock picker’s market

Few investors realise that India is home to the oldest stock exchange in Asia. Founded in 1875, the BSE (also known as the Bombay Stock Exchange) is the tenth oldest in the world.
The National Stock Exchange of India (NSE) was incorporated in 1992. Trading began in 1994, with it later becoming the country’s pre-eminent stock exchange. Its market cap reached $5.1 trillion as of the end of 2024, placing it among the 10 largest stock exchanges globally.
Between them, the BSE and NSE are home to roughly 7,700 companies.
When it comes to selecting names for a portfolio, many investors opt to stick to an index. To put that into context, some of the most well-known Indian equity indices consist of between 30 and 500 names. This means the index at lower end of that range is comprised of less than 0.4% of all listed Indian companies, while the index at the upper end represents less than 6.5%.

For Mike Sell, Head of Global Emerging Market Equities, indices can be useful tools. “There are numerous index providers which provide a really useful service to investors. That work is not to be underestimated or undervalued. But indices are a tool, not a panacea. There are huge numbers of companies that are not included in the main Indian indices that should not be ignored by investors,” he adds. “The opportunity set is vast, especially for companies in the small to mid-cap range, which is why it can be hugely rewarding for investors to look beyond the obvious and venture outside the confines of a predetermined list.”
Among the limitations of sticking solely to an index is their tendency to reflect the more traditional industries of the past.

About half of the holdings in the Alquity Indian Subcontinent Fund are not in the main Indian indices. For Mike “it’s about using rigorous fundamental analysis and a disciplined investment approach to uncover hidden gems”.

WHAT MAKES A STOCK PICKER’S PARADISE?

The goal of any active manager is to identify mispriced securities that have the potential to deliver higher returns than the market, thereby generating better returns for investors.
One of the hallmarks of a good stock-picking environment is a resilient macro backdrop — where the economy is stable enough for company fundamentals to drive performance. “And this is the case with India… For example, it was well insulated against the tariffs announced by Donald Trump in early 2025, as such a small proportion of GDP is linked to US exports.”
“No country is entirely isolated from what is happening in the wider world; but a strong economy that is driven primarily by domestic, rather than global, factors creates a rich seam of opportunity for active managers”.

LEADERS AND LAGGARDS

Beyond a lower level of sensitivity to external forces, high return dispersion is also a core feature of a good stock picking market. A wide range of returns within a market increases the potential for active managers to pick winners and avoid laggards.
For Mike, this is where a robust investment process is vital. “It’s important to analyse why a particular company could outperform its peers. There will be several reasons for this; but the important thing to understand is whether it has stable and repeatable growth.”

OUT OF SYNC

Another key feature of a stock picker’s market is low correlation, where individual stock performance is driven less by broader, global macroeconomic factors, and more by company-specific fundamentals.
“Macroeconomic developments will always impact companies… There is no getting away from that. No active manager can, or should, ignore what is happening in the wider economy; but, to a greater or lesser extent, things such as changes to government policies will generally affect companies in similar ways.”

FUTURE WINNERS

True active managers, skilled stock pickers, relish markets that demonstrate high dispersion and low correlation because they are more likely to find mispriced opportunities.
“As an active manager, part of my drive, my passion for my work, is finding strongly growing and well-managed companies that have not yet been recognised. And India is a fantastic market in which to do that.”
“It’s size and scale are increasingly becoming recognised. It has one of the strongest predicted GDP growth rates in the world, according to the IMF. It has an ambitious government that has implemented a lot of business-positive reform over the past few years.”
The indices provide a snapshot of today’s winners. What the Alquity team is looking for is tomorrow’s winners.

 

SOURCES:

BSE, as of 2025, World Federation of Exchanges (as of 15th May 2025), BSE (as of 10th November 2025): NSE, as of March 2025, IMF, as of October 2025

India vs China: Where is the best opportunity now?

The webinar, hosted by Mike Sell, focused on Emerging Markets with a particular emphasis on China and India. Mike highlighted recent market performance, noting that India has lagged behind other Emerging Maarkets, while China and South Korea have shown stronger gains YTD. Key drivers of India’s underperformance included tariffs concerns and economic growth, but these issues are now easing.

For China, the recovery is gradual, with slowing consumer confidence, retail, and property sales, though the country remains a major manufacturing hub despite of US tariffs. In addition, broader Emerging Markets offer diverse opportunities, including structural growth themes like digitalisation, domestic retail, travel and e-commerce, such as our holdings in Jago (Indonesia), Fourlis (Greece), Air Astana (Kazakhstan), and SEA (Southeast Asia).

India’s investment case is both structural and supported by cyclical tailwinds: GDP growth has accelerated, inflation and interest rates are low, tax cuts and a good monsoon support consumption, and foreign investment is increasing. India’s growth is largely domestic, giving low correlation with developed markets and supporting a big, liquid equity market.

Watch the replay here:

Disclaimer: 

This marketing communication is issued by Alquity Investment Management Limited (“AIML”) for distribution both within and outside the United Kingdom. AIML is incorporated in England and Wales (Company No. 07992381) and is authorised and regulated by the Financial Conduct Authority (FRN 463991). Its registered office is Audrey House, Ely Place, London, EC1N 6SN. This material is for distribution to Professional Clients only, as defined under the Financial Conduct Authority’s (“FCA”) conduct of business rules, and should not be relied upon by any other persons. The Alquity Asia Fund, Alquity Future World Fund, Alquity Indian Subcontinent Fund and Alquity Global Impact Fund are sub-funds of the Alquity SICAV (the “Fund”), which is a UCITS-compliant investment vehicle and a recognised collective investment scheme under the Financial Services and Markets Act 2000 (FSMA) in the United Kingdom. The Alquity SICAV is an open-ended investment company managed by Limestone Platform incorporated under the laws of Luxembourg and authorised by the Commission de Surveillance du Secteur Financier (CSSF). The Fund is authorised under the UCITS Directive (Directive 2009/65/EC). Sub-funds may not be registered for distribution in all jurisdictions. Alquity Investment Management Limited acts as the investment manager to the SICAV.
The information in this document (this “Document”) is for discussion purposes only. This Document does not constitute an offer to sell, or a solicitation of an offer to acquire, an investment (an “Interest”) in any of the funds discussed herein. This Document is not intended to be, nor should it be construed or used as, investment, tax or legal advice. This Document does not constitute any recommendation or opinion regarding the appropriateness or suitability of an Interest for any prospective investor. This material is for distribution to Professional Clients only, as defined under the Financial Conduct Authority’s (“FCA”) conduct of business rules, and should not be relied upon by any other persons.
This Document may not be reproduced in whole or in part, and may not be delivered to any person (other than an authorised recipient’s professional advisors under customary undertakings of confidentiality) without the prior written consent of the Investment Manager.
This Document is qualified in its entirety by the information contained in the Fund’s prospectus and other operative documents (collectively, the “Offering Documents”). Any offer or solicitation may be made only by the delivery of the Offering Documents. Before making an investment decision with respect to the Fund, prospective investors are advised to read the Offering Documents carefully, which contains important information, including a description of the Fund’s risks, conflicts of interest, investment programme, fees, expenses, redemption/withdrawal limitations, standard of care and exculpation, etc. Prospective investors should also consult with their tax and financial advisors as well as legal counsel. This Document does not take into account the particular investment objectives, restrictions, or financial, legal or tax situation of any specific prospective investor, and an investment in the Fund may not be suitable for many prospective investors. An investment in the Fund is speculative and involves a high degree of risk. The Fund’s investment approach is long-term, investors must expect to be committed to the Fund for an extended period of time (3-5 years) in order for it to have an optimal chance of achieving its investment objectives.

Building India’s Future

APL Apollo: Building India, one tube at a time

APL Apollo is more than a steel tubes manufacturer; it plays a key role in India’s infrastructure growth. The company produces pre-engineered steel tubes and structures that are lighter and more cost-effective than traditional concrete and brick construction. This industrial efficiency translates directly into social impact: schools, hospitals, warehouses and metros are built around 40% faster while cheaper, expanding access to education, healthcare and economic activity across Tier 2 and Tier 3 cities. By reducing material waste and enabling modular construction, APL Apollo also addresses environmental sustainability (a key consideration in long-term urban development). Modular steel construction reduces raw material intensity and supports recycling, while economic development occurs naturally through job creation at plants and construction projects. According to a study from the University of Hong Kong, modular steel construction can result in an approximate 46% reduction in waste when compared to conventional methods.
The company’s products form part of the backbone of New India’s industrial and urban ecosystems, showing that long-term profitability can coexist with social and environmental benefits.

Cholamandalam: Financial inclusion as a growth engine

Cholamandalam, a long-standing holding in our Indian portfolio, exemplifies how financial services can drive real social mobility. Unlike traditional banks, which historically often focus on large corporates, Chola targets the unbanked segments of India’s economy, such as small vehicle fleet operators, rural entrepreneurs and informal business owners. Vehicle loans, small-business credit and structured financing enable these individuals to grow their businesses, increase income and provide employment in their communities. For example, a single truck loan can transform a family business into a multi-employee operation, connecting villages to markets and enabling rural economic growth. By extending formal credit to these segments, Chola helps reduce borrowers’ reliance (and vulnerability) on informal money-lenders that often charge exorbitant interest rates (up to ten times higher), a common obstacle to small-business growth in rural India, as pointed out by the Reserve Bank of India.
Sustainability is embedded in Chola’s approach through responsible lending: products are designed to enhance borrowers’ livelihoods rather than create debt traps. Chola exemplifies how capital deployment can directly empower communities while maintaining a healthy and consistent growth track record.

Aptus Value Housing Finance: Housing finance delivering social benefits

Aptus, a fast growing name in our portfolios, illustrates how financial services can deliver social benefits in the housing sector. While other lenders tend to focus on higher salaried, urban borrowers, Aptus goes deeper into the Indian “underserved” economy, such as self employed individuals in rural and semi urban markets, and first time homeowners and households in Tier 2 and Tier 3 cities (which are considered by other lenders as high-risk segments. Despite the higher perceived risk, Aptus’s discipline and underwriting practices are reflected in very low non-performing assets that are well below industry averages, indicating the company’s resilience and risk management.
Aptus’ product offering (housing loans for self construction, home improvement and refurbishment, extensions, etc.) helps families move from informal cash credit (which can carry onerous interest rates of up to 60% annually) or lack of financing into secure, asset backed borrowing. By doing this, Aptus supports wealth creation (as a home is often a family’s largest asset) and improves living standards, so that families are not stuck in inadequate dwellings which are widely common in rural India.

Sources: Wei Pan and Zhiqian Zhang, as of 15th January 2023, 2 Reserve Bank of India’s report on currency and Finance as of August 2024.

Disclaimer: 

This marketing communication is issued by Alquity Investment Management Limited (“AIML”) for distribution both within and outside the United Kingdom. AIML is incorporated in England and Wales (Company No. 07992381) and is authorised and regulated by the Financial Conduct Authority (FRN 463991). Its registered office is Audrey House, Ely Place, London, EC1N 6SN. This material is for distribution to Professional Clients only, as defined under the Financial Conduct Authority’s (“FCA”) conduct of business rules, and should not be relied upon by any other persons. The Alquity Asia Fund, Alquity Future World Fund, Alquity Indian Subcontinent Fund and Alquity Global Impact Fund are sub-funds of the Alquity SICAV (the “Fund”), which is a UCITS-compliant investment vehicle and a recognised collective investment scheme under the Financial Services and Markets Act 2000 (FSMA) in the United Kingdom. The Alquity SICAV is an open-ended investment company managed by Limestone Platform incorporated under the laws of Luxembourg and authorised by the Commission de Surveillance du Secteur Financier (CSSF). The Fund is authorised under the UCITS Directive (Directive 2009/65/EC). Sub-funds may not be registered for distribution in all jurisdictions. Alquity Investment Management Limited acts as the investment manager to the SICAV.
The information in this document (this “Document”) is for discussion purposes only. This Document does not constitute an offer to sell, or a solicitation of an offer to acquire, an investment (an “Interest”) in any of the funds discussed herein. This Document is not intended to be, nor should it be construed or used as, investment, tax or legal advice. This Document does not constitute any recommendation or opinion regarding the appropriateness or suitability of an Interest for any prospective investor. This material is for distribution to Professional Clients only, as defined under the Financial Conduct Authority’s (“FCA”) conduct of business rules, and should not be relied upon by any other persons.
This Document may not be reproduced in whole or in part, and may not be delivered to any person (other than an authorised recipient’s professional advisors under customary undertakings of confidentiality) without the prior written consent of the Investment Manager.
This Document is qualified in its entirety by the information contained in the Fund’s prospectus and other operative documents (collectively, the “Offering Documents”). Any offer or solicitation may be made only by the delivery of the Offering Documents. Before making an investment decision with respect to the Fund, prospective investors are advised to read the Offering Documents carefully, which contains important information, including a description of the Fund’s risks, conflicts of interest, investment programme, fees, expenses, redemption/withdrawal limitations, standard of care and exculpation, etc. Prospective investors should also consult with their tax and financial advisors as well as legal counsel. This Document does not take into account the particular investment objectives, restrictions, or financial, legal or tax situation of any specific prospective investor, and an investment in the Fund may not be suitable for many prospective investors. An investment in the Fund is speculative and involves a high degree of risk. The Fund’s investment approach is long-term, investors must expect to be committed to the Fund for an extended period of time (3-5 years) in order for it to have an optimal chance of achieving its investment objectives.

India: the disconnect between fundamentals and the market

The performance of the Indian stock market has recently been lacklustre. This is despite a significant improvement in the economic environment, with 100bp of interest rate cuts in 2025 (to 5.5%) and significant cuts in income tax in the February budget followed by the recent rationalisation and reduction of the Goods and Service Tax. This is in addition to continued elevated spending on infrastructure, and a further successful monsoon (with rainfall 108% of the long run average) which will boost the rural economy.  Inflation remains low (2.1% year on year in August) and foreign exchange reserves remain robust ($700.2bn as at 26th September).

So, why the subdued performance?  We ascribe this to 3 factors:

  1. Earlier concerns about a weakening growth environment: with Q3 2024 GDP reported at just 5.4%. This was due to a number of one-off factors, and does not represent the underlying growth dynamic as evidenced by subsequent GDP growth in the first two quarters of 2025 of 7.4-7.8%. These stronger prints are prior to the impact of the interest rate and tax cuts, and thus we expect a strong upcoming Festival and Wedding season. Indeed, the Reserve Bank of India revised up their expectations for GDP in their October 2025 policy meeting, and gross foreign direct investment rose 33% in the first four months of this fiscal year to an all-time high for that period of $37.7bn.
  2. Geopolitical noise following Trump’s tariff imposition on India. In our view, this is largely irrelevant as exports to the US represent just 2.5% of Indian GDP and India’s circa 7.5%+ GDP is driven by domestic structural growth (such as urbanisation and the shift to the organised sector), in stark contrast to China’s export driven economy.
  3. A switch to alternative investment destinations. AI-related stocks have driven strong performance in markets such as Taiwan, as well as also having a significant influence on the performance of China and Korea. We believe that a reduction in foreign allocations to India has partly funded that switch. However, domestic investors continue to add to the Indian market (with inflows in July 2025 reaching a 9 month high) which demonstrates their confidence in the outlook for their home market. Furthermore, we do not believe that the Indian story should be seen as a tactical allocation for short term alpha, rather a structural, relatively uncorrelated long-term growth opportunity. We expect that foreign flows will resume to India as investors appreciate the significantly better economic environment and lock-in exceptional profits from elsewhere. Indeed, HSBC upgraded India to an ‘overweight’ last week. Finally, increased interest in Emerging Markets more generally and the resultant inflows into the asset class (which have accelerated in recent weeks) will also benefit India, as the third largest weighting within the universe.

Turning to valuations, which are never ‘cheap’ in terms of an absolute low p/e number, due to the multi-year structural growth opportunity which is not captured in a 1-2 year forward p/e. In addition, India benefits from a high Return on Equity and good corporate governance compared to many other markets. Nevertheless, current p/e valuations have descended back to their 5yr average and p/b valuations are approaching 1 standard deviation below their 5yr average. We believe that these are unjustified given the substantially improved outlook.In conclusion, we believe that the disconnect between the strong and improving fundamentals of the Indian economy and the lacklustre stock market is purely transitory, providing a potential opportunity for the long-term investor.

Source: Alquity, Government of India, JP Morgan, Spark, CLSA, HSBC October 2025

Disclaimer: 

This is not an offering memorandum or prospectus and does not constitute investment advice. This is a marketing communication that is intended for information purposes only. The content, including external data sources, is believed to be reliable but no assurances or warranties are given. The companies mentioned are shown for illustrative purposes only, do not constitute investment advice, and are not a recommendation to buy or sell any security.
Investments in emerging markets, including India, involve greater risks, including political, currency, and liquidity risks.
Prospective investors should read and understand the terms of the Prospectus (including the risk factors) prior to purchasing units in any of the funds. There can be no assurance that the fund’s investment objectives will be achieved and investment results may vary substantially over time. We do not provide financial, tax or legal advice and we recommend that you obtain your own independent advice tailored to your individual circumstances prior to investing. Prospective investors should be aware that the value of
investments can go down as well as up and past performance is not an indicator of future performance. Investors should be aware that by investing in the fund, they risk losing all or part of the capital invested. The Alquity Asia Fund, Alquity Future World Fund, Alquity Indian Subcontinent Fund and Alquity Global Impact Fund are sub-funds of the Alquity SICAV (the “Fund”), which is a UCITS-compliant investment vehicle and a recognised collective investment scheme under the Financial Services and Markets Act 2000 (FSMA) in the United Kingdom.
The Alquity SICAV is an open-ended investment company managed by Limestone Platform incorporated under the laws of Luxembourg and authorised by the Commission de Surveillance du Secteur Financier
(CSSF). The Fund is authorised under the UCITS Directive (Directive 2009/65/EC). Sub-funds may not be registered for distribution in all jurisdictions. Alquity Investment Management Limited acts as the investment manager to the SICAV.
This marketing communication is issued by Alquity Investment Management Limited (“AIML”) for distribution both within and outside the United Kingdom. AIML is incorporated in England and Wales (Company No. 07992381) and is authorised and regulated by the Financial Conduct Authority (FRN 463991). Its registered office is Audrey House, Ely Place, London, EC1N 6SN.