Still, Singh called the correction justified and not alarming. “Most of the profits over the last two years have come prominently from these five to seven companies, so that’s a breather. That’s fine. It’s fair, but that’s not something to worry about,” he said.He also pointed to potential macro-positive developments ahead. “If tariffs are eliminated, inflation will suddenly drop and the Federal Reserve will continue to cut rates,” he said, referring to the U.S. Supreme Court’s recent tendencies to curb unilateral presidential tariff powers.
Is there a bubble?
Singh distinguished between established tech giants and speculative plays. “The Fab 7 is not a bubble,” he said, explaining that while the valuations of companies like Nvidia or Tesla may be questionable, he said, “Can you value a hardware company like a software company? I’m not sure,” and others like Apple, Google and Meta continue to justify their strength.
“These companies are still at multiples of 25 to 30, and they have such strong competitive positions that they don’t have any competition in sight,” Singh said. “Any investment that goes into AI will come from their balance sheet… At worst, they will slow down their investments, which is even better. The companies will pass on more profits to the investors.” Where Singh does see froth is in smaller, speculative corners of the market. “Quantum computing – there are certain stocks that are up 3,200% in one year, and that’s a bubble,” he said. “Some of the rare earth companies had stocks at $1-2, now they’re $35, $40, $50 – that’s a bubble.”
India needs another year of absorption
On India, Singh says that while the structural story remains intact, valuations are demanding. “I firmly believe that the India story is there, but it is about 10% nominal growth,” he said. “After a year of moderation, they now look something like this: around 12% for Nifty in six years, 22% for mid and small, and Nifty 500 looks like 15%.”
He argued that the market could benefit from consolidation. “I would be very happy if we had another year of absorption in the Indian markets and things would look very, very attractive,” Singh said, warning that “nobody values [mid and smallcaps] like the way they are valued in India.”
The FII story is a distraction
Singh downplayed the importance of foreign institutional investors in the current cycle. “I always look at the FII story as a distraction,” he said. “Domestic institutional investors have collectively bought about $70 billion this year. FIIs have just sold $17 billion. So who sold the rest of the $53 billion? That’s all domestic.”
Singh called India “the IPO capital of the world today” and warned that while this benefits sellers, “it is not good for the investor in general.” He concluded: “Moderation is good. It will be good for the long-term investor. Why do you want a short-term return unless you just want to cash out and you are in a bubble, which is not the case.”
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Singh said he remains selectively positive. “The sectors I like, I like healthcare. I like private banks. But outside of that, this is time to be a little bit cautious. There are no more solid returns in the market for a while that investors should jump into.”
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