European asset owners eye 'standalone' India equity mandates with caution
India’s National Stock Exchange has been boosted by several large IPOs such as Tata Capital and LG Electronics. This has boosted Indian equity markets and encouraged investors to consider increasing their exposure to the county (Dhiraj Singh/Bloomberg)
European institutional investors are mulling over targeted equity mandates for the Indian market given its strong macroeconomic tailwinds, including a youthful urban population and high infrastructure spending. But amid a backdrop of volatile equity markets and concerns over stock valuations, European investors are proceeding with caution.
According to a new report from bfinance, "standalone India equity mandates" are becoming more popular among institutional investors, given manager "outperformance" and the country's favourable market tailwinds, with investor sentiment holding up in spite of ongoing "tariff uncertainty".
In its "DNA of a Manager Search: India equity" report, published in October, the investment consultancy said the appeal of India's young and urban population, as well as the government's "pro-business" policies, were supporting investor demand.
It noted that many institutions have been "considering their first India equity allocation", a trend highlighted by some European investors recently interviewed by MandateWire.
In September, Oliver Lang, a board member of the €28.4bn ($32.6bn) KZVK German Catholic Church Pension Scheme, told MandateWire Analysis it was exploring the Indian market, which he described as "exciting", while adding that there was "still a long way to go before India can be fully integrated into a global strategy".
Meanwhile in August, Coutts Family Office's executive director Adam Brownlee told MandateWire it had had positions in India "for quite some time, but in very small proportion".
While some investors are exploring segmented allocations to the Indian market, some European investment professionals remain sceptical. Michel Meert, Mercer's European consulting leader for family offices, foundations and endowments, tells MandateWire Analysis he has seen "no demand" so far for segmented mandates, with Mercer instead advising clients to "have a global EM exposure rather than country by country".
India's equity market has recently benefited from large initial public offerings, with Tata Capital and LG Electronics India both debuting in October on the National Stock Exchange in Mumbai. While LG's Indian imprint was valued at $13bn, Tata Group described its IPO as India's "biggest ever by a non-banking financial company".
Meanwhile, the country has seen strong demand for projects from real estate investors, which has chimed with high government infrastructure spending.
According to Deloitte's 2026 commercial real estate outlook, India is expected to be a top destination for European and Asia-Pacific real estate investors (managing at least $250mn in assets), with 86 per cent expecting to increase investment in the market next year.
Earlier this year, MandateWire Analysis reported on the Indian government's record $129.5bn in announced infrastructure spending for the 2025 fiscal year, as well as plans for the electrification of around 95 per cent of the country's rail network.
Growing manager universe
To accommodate growing demand from European asset owners, many managers have been bolstering their teams handling the Indian market.
According to a 2024 analysis from bfinance of nearly 100 investment strategies from 78 institutional managers, around a third oversaw Indian equity strategies with more than $1bn in assets under management.
“Improving macro indicators and a strong earnings trajectory could set the stage for [an Indian equity] rally from the second half of 2026 onward”
"The manager universe is large and diverse," the report said, with both "domestic houses" and global asset managers offering strategies, alongside a "strong emphasis on fundamental investment approaches and growth styles".
The consultancy also revealed that managers are opting for both highly concentrated and more diversified equity portfolios, with a similar percentage of managers running "concentrated" portfolios with between 25 and 40 stocks as those operating "moderately diversified" portfolios, with 40 to 60 stocks (with 30 per cent and 31 per cent of managers respectively).
Caution and optimism over equity market
In a research note published in September, JPMorgan wrote that "disappointing" corporate earnings and "lacklustre domestic consumption" had taken a toll on Indian equities, which it described as "volatile", but it sounded a note of optimism that a "strong policy push to revive domestic growth" could brighten the outlook for the Indian market.
"Improving macro indicators and a strong earnings trajectory could set the stage for a rally from the second half of 2026 onward," Rajiv Batra, head of Asia and co-head of global emerging markets equity strategy at JPMorgan, said alongside the note.
Claire Shen, WTW's head of emerging markets equities, told MandateWire Analysis earlier in 2025 that India had a "very vibrant economy" and a "strong" macroeconomic backdrop, buoyed by its young population and its high relative GDP growth, in the high single-digits.
But, she cautioned, there are some investor concerns that Indian company valuations have become "extremely expensive", with some businesses trading at 90 or 100 times their price-to-earning ratios.
Bfinance's report notes that "valuations represent an important area of concern in 2025, with investors conscious of high [price-to-earning] levels following recent Indian equity performance".