Mosaic's Maneesh Dangi is not turning bullish on equities: 'The macro is a little messy'

Higher US yields change the maths Dangi framed the current market correction through the lens of global bond markets. During 2014-24, when US real yields were near zero, Indian equities trading at about 20 times earnings — implying an earnings yield of 5% — looked attractive. “Today, bond yields in the US offer two-and-a-half to 3% real yield,” he said. “Instead of 5% looking sort of reasonable, it looks super dear.”

His argument is that the rise in global real rates has raised the hurdle rate for equities worldwide, making high-valuation markets more vulnerable even when domestic growth remains decent. Rupee and rate alignment Dangi also flagged currency instability as a constraint on foreign and domestic investor confidence. “Even though our macro has been decent, our GDP has grown at a decent pace, yet you kind of see the currency is in turmoil,” he said.

He linked part of that pressure to Indian interest rates needing to align with US rates. “Everyone knows this: Indian rates will have to align with the US. To that extent, even for the bulls, it’s becoming very difficult to become super bullish,” Dangi said. Earnings may track nominal GDP Beyond rates and currency, Dangi said investors should moderate expectations for corporate profit growth. He expects India's nominal GDP growth to be around 10% and sees limited scope for earnings to sustainably outpace that level without a major fiscal push or innovation cycle.

“In absence of any major fiscal splurge or a major innovation cycle kicking in India, it’s unlikely that earnings will grow faster than that over long periods,” he said. “So 10%, 11% is what you get.” That does not make equities unattractive, but it suggests investors should not expect the kind of broad, multiple-expansion-driven returns seen in earlier cycles. AI risk in financials Dangi also identified artificial intelligence as a structural risk for India's financial sector, one of the market's most important segments.

“I think BFSI — banking, asset management, wealth management — many of the businesses will be disrupted in a meaningful fashion through AI,” he said. For investors, the warning is that productivity gains from AI may not accrue evenly across incumbents. Banks, asset managers and wealth platforms could face margin pressure, disintermediation or a need for heavier technology investment. A neutral, selective stance

Dangi's overall position is neither bearish nor euphoric. He accepts that the valuation excess of two years ago has eased, but argues that the macroeconomic environment no longer supports indiscriminate risk-taking. His view effectively frames the current market as one for balanced portfolios and selective positioning: equities remain important for long-term wealth creation, but the tailwind from near-zero global interest rates has faded.