Investors in other markets would be envious of India multiples: Rich Handler, chief executive of Jefferies

A stock-market multiple is a valuation comparison. It relates a company’s share price to a measure such as earnings. A higher multiple means investors are paying more for each unit of that measure. A lower multiple means they are paying less. Investors use multiples to judge whether prices look expensive or attractive.

For example, if two companies produce similar earnings but one trades at a higher multiple, investors expect stronger future growth or see lower risk there. The article does not give a specific Indian multiple. Instead, Handler says Indian valuations are reasonable by any measure, and that some investors elsewhere would envy them.

This matters because valuation affects capital flows. Investors may move money toward markets offering better relative value. India’s recent outflows therefore do not automatically prove that its stocks are overpriced. Handler points to strong companies, returns on capital, management quality and long-term confidence in India as reasons investors may return.

Foreign investors are selling or redirecting money for several overlapping reasons, not because the article identifies one structural rejection of India. Ashish Jhaveri names tariffs, AI and oil as the three biggest factors over the previous 12 months. Currency depreciation added further pressure. Global investors also compare markets with one another, so India can lose allocations when other opportunities look better.

AI appears to be a major destination for capital. Handler says it has attracted a disproportionate share of global funding, diverting money from India and non-technology businesses elsewhere. Investors have also faced higher US yields and may redirect funds toward opportunities offering stronger relative value. The article does not quantify how much of the outflow came from any single factor.

The pressure is therefore described as largely external, while domestic fundamentals remain strong. Handler expects India’s relative performance could improve if tariffs, oil-related pressure, currency weakness or the intense AI capital concentration begins to reverse.

International investors constantly compare opportunities. When AI stocks attract exceptional funding, or US debt markets offer more appealing yields, investors may reduce positions in Indian shares. That withdrawal lowers the flow of new money supporting Indian stocks and can contribute to market weakness or relative underperformance.

The article gives a clear example. AI stocks have been driving global indexes, while investors and hedge funds have followed that trade. Handler says AI funding has diverted capital from India and non-tech businesses in the US and elsewhere. He also says a short period of outflows may reflect redemptions, investors already overweight India, or redirected capital.

India’s underlying case remains intact in the article. Handler cites human capital, work ethic, demographics, companies with good returns on capital and strong management. He calls the recent six-week pause healthy and says relative value ultimately wins. If AI investment cools, India could benefit from capital broadening beyond one sector.

Data centres require substantial physical infrastructure and specialized capabilities. If investment slows in the United States, companies building AI services may look for other locations for future facilities. That could create an opening for India, especially if it can offer suitable land, skilled people and workable cooling systems.

Handler specifically identifies India’s land, talent and innovative cooling solutions as advantages. He says the country has significant opportunities in data centres and AI. His mechanism is straightforward: slower US investment could make hyperscalers consider India for projects that might otherwise have been developed in the United States.

This does not mean AI investment is ending. Handler expects progress to continue, but says capital deployment may face greater scrutiny. India could benefit from that healthier allocation process. Its opportunity would extend beyond receiving general portfolio flows, potentially including new data-centre activity and participation in the AI infrastructure economy.

Long-term capital-gains tax affects the return investors keep after selling an investment. If the rules are complicated or the tax burden is viewed as high, foreign investors may find a market less attractive than alternatives. Simplifying the regime can reduce uncertainty and make cross-border investing easier to assess.

Handler supports improving India’s long-term capital-gains tax regime. He says greater transparency and less tax friction would help bring more investors into India. The proposed change discussed in the interview is scrapping or improving LTCG treatment for foreign investors, but the article does not specify a final policy or estimate the resulting capital inflow.

Tax changes would be one part of India’s broader investment proposition. Handler also cites human capital, work ethic, stable government, capital markets, legal systems and demographics. A clearer tax regime could strengthen that proposition and improve market attractiveness, but it would not remove other forces, including AI-driven capital shifts, oil, tariffs or currency movements.

International investors compare expected returns across countries. When US interest rates and bond yields rise, US assets can become relatively more appealing, especially for investors seeking income or lower perceived uncertainty. That can make India look less attractive on a relative basis, even if Indian companies and domestic conditions remain strong.

The article links this comparison to US debt markets and AI funding. Handler says US debt markets are signalling caution, while investors reassess which capital-intensive AI projects can succeed. Ashish Jhaveri adds that global investors affected by tariffs, AI, oil and currency depreciation have found better opportunities elsewhere. These forces can pull capital away from India.

The article does not quantify how much higher US yields caused the outflows. Handler says capital moves for various reasons and that a short outflow period is not a statement on India. He points to vibrant companies, good returns on capital and strong management, arguing that relative value can eventually bring investors back.

Valuations show what investors are paying now, while expected earnings indicate what companies may deliver later. A market can outperform when its prices look reasonable and its companies are expected to produce strong growth or returns. But international capital also matters because investors compare countries and redirect money toward the best relative opportunity.

The article illustrates this interaction. Handler says Indian valuations remain reasonable and highlights companies with good returns on capital and strong management. Yet AI has attracted disproportionate global funding, while tariffs, oil and currency depreciation have hurt India’s relative position. Investors therefore moved toward AI or other markets even without abandoning India’s long-term appeal.

Future performance depends on how these forces change. A pause in AI investment could broaden capital flows. Lower oil prices or an end to the war would help India, Handler says. If external pressures ease while earnings and company quality remain strong, India could perform better relative to other markets.