April’s sharp rebound rewarded patience and conviction. But the more important story for India may be domestic. The BJP’s historic victory in West Bengal, a state governed by the opposition for over four decades, reinforces the structural growth floor that India bears continue to underestimate. Yes, AI will disrupt urban tech hubs. But beneath that headline, infrastructure-led development across tier-2 and tier-3 India is accelerating, creating demand pools that did not exist five years ago. For bottom-up stock pickers, the opportunity set has rarely been this rich. In this edition, we explain why. Enjoy!
The MSCI India Index returned 9.17% (in USD terms1)) in April, delivering its strongest monthly performance since March 2025. The rally was broad-based, with all sectors except IT posting positive returns. Real Estate and Industrials led the recovery, followed by Utilities and Consumer Staples. IT was the sole laggard, declining 0.51% as the sector continued to face headwinds from elevated uncertainty around AI-driven disruption to traditional services business models.
The dominant driver of the month’s rally was the announcement of a US-Iran ceasefire in early April, which offered the first meaningful de-escalation since the conflict began in late February. Markets surged on the news, with Indian benchmarks gaining sharply as crude oil prices retreated from their highs and risk appetite returned. However, the ceasefire remains fragile. Brent crude, while off its peaks, remained elevated near USD 115 per barrel by month-end, keeping energy import costs and inflationary pressures firmly in focus.
Despite the strong equity market recovery, foreign portfolio investors (FPIs) continued their selling streak, withdrawing approximately USD 6.5 billion from Indian equities in April.2) This brings cumulative FPI outflows in the first four months of 2026 to approximately USD 20 billion, already exceeding the USD 18.9 billion withdrawn in all of 2025.3) Notably, FPI ownership of Indian equities has fallen to approximately 16%, the lowest level in nearly two decades.4) Domestic institutional investors continued to provide a critical counterbalance, absorbing foreign selling and helping to underpin the market’s resilience.
The Reserve Bank of India (RBI) held the repo rate unchanged at 5.25% at its April 6-8 policy meeting, maintaining a neutral stance for the third consecutive review. The RBI revised its FY27 GDP growth forecast down to 6.9% (from 7.4% in February) and raised its FY27 CPI inflation projection to 4.6%, nearly double the 2.1% recorded in FY26, with the central bank flagging upside risks from elevated energy prices, a weak rupee, and potential El Niño conditions.
Activity indicators showed signs of recovery after March’s conflict-induced weakness. Manufacturing purchasing managers’ index (PMI) rebounded to 54.7 in April (from 53.9 in March), supported by improved domestic demand and a pickup in new orders.5) Export orders were a notable bright spot, growing at their fastest pace in nine months as global supply chain diversification continued to benefit Indian manufacturers. Services PMI climbed to a five-month high of 58.8 (from 57.5 in March), pointing to sustained strength in India’s dominant services sector.6) However, input cost inflation remained elevated, driven by higher prices for fuel, chemicals, and metals linked to disruptions in the Middle East.
Headline consumer price index (CPI) inflation rose to 3.40% y/y in March (vs 3.21% in February), remaining comfortably within the RBI’s 2-6% tolerance band but trending higher as energy prices feed through.7) On the fiscal side, goods and services tax (GST) collections hit a record INR 2.43 lakh crore (~USD 26 billion) in April, growing 8.7% y/y and underscoring the resilience of underlying domestic demand and improving tax compliance.8)
In our Q1 commentary, we wrote that the March drawdown was a temporary dislocation and that Asian equities, including India, presented one of the most compelling entry points in years. April validated that view decisively. Our decision not to sell during the March panic was grounded in a simple framework: as long as the Middle East conflict did not escalate into a broader confrontation drawing in China, the fundamental investment case for the region remained intact. That assessment proved correct. What followed was a textbook reversal of the indiscriminate selling that had penalized the region.
The Strait of Hormuz, while not fully reopened, saw partial traffic resume in April, and the US paused its naval blockade, citing progress in negotiations. Markets responded swiftly, with risk appetite returning across the region and oil pulling back from its highs. However, the ceasefire has been fragile, with violations on both sides, and the core issues of Iran’s nuclear program, sanctions relief, and Hormuz sovereignty remain unresolved.
As of this writing on May 8th, the two sides are reportedly close to agreeing on a 14-point memorandum of understanding that would formally end hostilities and initiate a 30-day period of detailed negotiations. Markets appear to be pricing in a resolution, and we share that base case, but we are watching closely. Oil remains around USD 120 per barrel, and we are hearing increasing pain from businesses, particularly in global aviation and logistics. Should the conflict drag on for another two to three weeks without a formal framework, the risk of a further oil spike and broader economic damage rises materially. At that point, the impact on corporate earnings would extend beyond a single quarter.
Beneath the geopolitical headlines, the most consequential development for India’s medium-term outlook may have been domestic. The Bharatiya Janata Party’s (BJP) sweeping victory in the West Bengal state elections on May 4th marks a political watershed. West Bengal had been governed by the opposition for decades, including 34 years of Communist Party rule, followed by the All India Trinamool Congress (TMC) since 2011. The BJP had never governed the state. To put this in perspective, this is arguably more significant than a party flipping a deeply entrenched opposition state in any Western democracy, because the prior regime had been focused on almost everything except economic growth and development.
The investment implications of this are significant, and we’ve seen this playbook before. When the BJP gained control of previously opposition-ruled states such as Uttar Pradesh, we saw a decisive pivot toward infrastructure development, ease of doing business, and governance reform that unleashed a wave of productivity and economic activity. West Bengal, with a population of nearly 100 million and decades of underinvestment, represents significant low-hanging fruit in terms of infrastructure, logistics connectivity, and industrial development.
We think this is the structural floor that the India bears are missing, particularly those focused on AI-driven disruption to the urban economy. While the pain in tech-dominated metros is real, the growth momentum building across tier-2 and tier-3 cities, powered by reform-oriented governance and infrastructure investment, provides a powerful counterweight that is often overlooked.
The AI infrastructure squeeze we discuss in greater detail in our April Asia commentary has direct implications for India, though the transmission mechanism differs from that in North Asia. India is not primarily a hardware enabler; its exposure is on the adoption and services sides, which creates a more nuanced picture.
Urban India, particularly the key metros dominated by IT services and global capability centers (GCCs) in southern India and the Delhi NCR region, is feeling the impact of AI-led productivity gains through headcount rationalization and reduced discretionary IT spending. This is showing up in softer hiring data and cautious management commentary from large-cap IT services firms. However, the market has been overly indiscriminate in pricing this risk, failing to differentiate between structurally challenged legacy IT services businesses and the consumer internet platforms that are actively deploying AI to expand margins, improve engagement, and deepen their competitive moats.
More importantly, the AI narrative overlooks the counter-dynamic playing out in India’s broader economy. The productivity gains from digitization, including AI adoption within India’s consumer platforms, are being reinvested to expand addressable markets in tier-2 and tier-3 cities. The combination of improving infrastructure, rising digital penetration, and GST-driven formalization is creating new pools of demand that were simply not accessible five years ago. This is why we continue to favor consumption companies that cater to the masses, with product category innovation and expanding geographic reach, over legacy incumbents that rely on stale brand premiums.
Our portfolio remains anchored in the four structural themes we have articulated throughout the past year:
Industrials and domestic manufacturing, where we see robust government capex, an emerging private investment cycle, and India’s structural positioning as a credible alternative in global supply chains. The same capex boom powering demand for semiconductors, power equipment, and data center infrastructure globally is generating meaningful downstream opportunities for Indian manufacturers. Manufacturing PMIs surged in April, and export orders hit multi-month highs as global supply chains continue to diversify away from single-source dependence on China. India’s positioning here is structural, not cyclical. Production-linked incentive schemes, the trade framework agreements with both the EU and the US, and the country’s cost advantages are drawing both domestic and foreign investment into industrial capacity. The West Bengal story reinforces this thesis: as governance reform expands to previously underinvested states, the infrastructure buildout accelerates, creating demand for power transmission, construction, and capital goods. Our exposure is anchored in companies building durable competitive advantages in power infrastructure, capital goods, and precision manufacturing, businesses with order books stretching well into the late 2020s where the growth drivers extend far beyond any single quarter of economic data.,
Consumer discretionary platforms, where we continue to own India’s leading “last man standing” franchises in food delivery, e-commerce, and online travel. These are businesses with deep moats, proprietary data, and fulfillment infrastructure that cannot be easily replicated. At current valuations, they offer both a cyclical recovery in urban demand and embedded optionality from their own AI adoption. We continue to like names that are gaining traction across new product categories and geographies, catering to the aspirational Indian consumer.
Financials, particularly leading private sector banks and differentiated lenders, where the combination of accelerating credit growth, transmission of cumulative RBI rate cuts, easing regulatory posture, and improving asset quality sets up a multi-quarter earnings recovery. The 125 basis points of cumulative easing delivered in 2025, now working its way through the system, should provide meaningful margin support as the year progresses.
Healthcare, where our holdings combine defensive characteristics with long-term structural growth from rising penetration. India’s leading hospital chains are entering their most aggressive capacity expansion in years, supported by robust cash flows and a persistent shortage of quality beds across the country. We detailed this in our March 2026 white paper on Asian healthcare. We are particularly excited about Narayana Hrudayalaya, which has proven that its low-cost, high-efficiency hospital model can travel beyond India. Its Cayman Islands operation served as the testing ground, delivering a dramatic margin expansion through technology-enabled workflows and sharper case selection. That success underpins the company’s acquisition of Practice Plus Group in the UK, a network of hospitals with long-term NHS contracts where similar operational improvements are expected. If successful, it would establish a powerful precedent for Indian healthcare delivery, addressing the growing need for affordable, quality care in developed markets.
Overall, we made no material changes to the portfolio during April. Our conviction in holding through the March drawdown, rather than de-risking into the selloff, has been a significant driver of the fund’s strong performance. The discipline to stay invested when the market is offering quality businesses at distressed prices is, we believe, one of the most important edges in active management.
Though the headlines may be negative, this is a compelling environment for bottom-up stock pickers. The benchmark today resembles the 1990s, when old conglomerates dominated the index just as private sector banks and technology companies were emerging as the real growth stories. Similarly, we are witnessing the rise of new winners and sectors across India. Being positioned in the winners of the future, rather than the winners of the past, is what will drive long-term returns.
Here, we capture some on-the-ground observations from our India team – notes and signals that serve as practical barometers for demand, sentiment, and trends.
The genericization of semaglutide in India marks a pivotal inflection point in diabetes and obesity care. As GLP-1 therapies become meaningfully more affordable, the shift is not merely expanding access, but it is reshaping market structure and unlocking a broad-based opportunity across the healthcare ecosystem.
The trigger was the expiry of the core patent for semaglutide on March 20, 2026. The response was immediate and unprecedented. On day one, approximately 10 companies launched roughly 18 brands across five distinct formats, with additional products already in the pipeline. Pricing has reset sharply, with monthly therapy costs now in the INR 2,000-4,200 range, representing a 60-75% discount to innovator products and materially widening the addressable market.
Prior to this, multinational innovators had seeded the category. Eli Lilly’s Mounjaro, launched in March 2025, saw an exceptional ramp-up. Within seven to eight months, it became the highest-selling pharmaceutical brand in India by value, an almost unprecedented trajectory. By October 2025, it was generating approximately INR 100 crore in monthly sales, with cumulative revenues of INR 450–600 crore within the first year. Notably, this adoption was largely out-of-pocket, underscoring both the depth of demand and consumers’ willingness to pay.
We view this category as structurally distinct from traditional pharma. Unlike disease-led demand curves, GLP-1 adoption is likely to be product-led, with weight loss acting as a powerful pull. This introduces consumer-like behaviour into a prescription market, blurring the boundary between therapy and lifestyle and significantly expanding the market opportunity.
Globally, the patent expiry extends to markets such as Canada, China, and Brazil, opening a near-term export window for Indian manufacturers. With the US and EU protected until 2031, Indian companies are well-positioned to scale as cost-competitive suppliers in newly accessible markets.
From an investor lens, the opportunity set is multi-layered. While generic formulators are the most obvious beneficiaries, value accrues across the chain, from CDMOs with injectable fill-and-finish capabilities to manufacturers of delivery systems such as injector pens. Beyond pharma, second-order effects are already visible. Appetite suppression associated with GLP-1s is driving incremental demand for protein supplementation and micronutrient support, while the chronic nature of therapy is increasing diagnostic testing intensity for metabolic and nutritional monitoring. Importantly, this category has the potential to pull a large new cohort into the formal healthcare ecosystem, with spillover benefits across segments.
In sum, semaglutide’s genericization is not just a pricing event. It is the start of a structural shift. As affordability drives adoption, the downstream impact will be felt across pharmaceuticals, manufacturing, nutrition, and diagnostics, making this one of the most consequential developments in Indian healthcare today.
Rising health awareness in India, driven by the increasing prevalence of lifestyle diseases and higher disposable incomes, is shifting consumer focus toward preventive healthcare and overall wellness. Consumers are increasingly adopting health supplements, plant-based products, and wearable devices to monitor fitness and health metrics.
Health wearables such as smartwatches and fitness trackers are gaining rapid traction, particularly among affluent consumers. Reflecting this trend, Deepinder Goyal, founder of Eternal (formerly Zomato), has launched a new health-tech startup called Temple, which is developing a wearable device to measure cerebral blood flow for elite athletes and longevity research.
Health-focused products are also becoming a key growth driver within the FMCG sector. Large FMCG companies are both launching and acquiring brands within the health supplement category. Dabur India recently launched Siens by Dabur, a direct-to-consumer nutraceutical brand focused on beauty and skin health, daily wellness, and gut health, offering products such as marine collagen, multivitamins, probiotics, and Omega-3 supplements. Amul and Parag Milk Foods (with its Avvatar brand) have introduced whey protein powders, making sports nutrition more accessible. Meanwhile, Hindustan Unilever has invested in Wellbeing Nutrition and Oziva (plant-based proteins), while Marico has backed Plix, a vegan nutrition brand.
Companies that can quickly adapt their product portfolios to cater to this increasingly health-conscious consumer base are well-positioned to gain market share in what is becoming one of the fastest-evolving segments of the Indian FMCG landscape.
With these insights, our team is constantly evaluating new ideas in these emerging categories that meet our investment criteria. One recent example is our investment in Shaily Engineering Plastics, one of only a handful of global manufacturers of pen injectors for GLP-1 drugs, with patented delivery device technology and high barriers to entry. As semaglutide goes generic across India, Brazil, Canada, and other markets, the addressable opportunity for injector pen suppliers could reach 250 million doses by 2030. Shaily is well-positioned to capture a meaningful share of this opportunity as a cost-competitive, scaled supplier with established relationships across major pharmaceutical companies. These are the kinds of opportunities that we look for: businesses with durable competitive advantages in structurally growing categories, and before the market fully appreciates the opportunity.
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Investment involves risk. Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the investment product will generate a return and there may be circumstances where no return is generated. Investors could lose all or a substantial portion of any investment made. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the investment product and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Shikhara’s investment products are suitable only for sophisticated investors and require the financial ability and willingness to accept the high risks and lack of liquidity inherent in Shikhara’s investment products. Prospective investors must be prepared to bear such risks for an indefinite period of time. No assurance can be given that the investment objectives of any given investment product will be achieved or that investors will receive a return of their investment.
Certain of the information contained in this website are statements of future expectations and other forward-looking statements. Views, opinions, and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance, or events may differ materially from those in such statements.
Certain information contained in this website is compiled from third-party sources. Whereas Shikhara Investment Management has, to the best of its endeavor, ensured that such information is accurate, complete, and up-to-date, and has taken care in accurately reproducing the information, Shikhara Investment Management takes no responsibility for the accidental publication of incorrect information, nor for investment decisions taken based on this website. Neither Shikhara Investment Management nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein should be relied upon as a promise or representation as to past or future performance of any investment product or any other entity.
The contents of this website are prepared and maintained by Shikhara Investment Management and has not been reviewed by the Securities and Exchange Commission of the United States or the Securities and Futures Commission of Hong Kong.
The Shikhara logo and name are trademarks of Shikhara Investment Management LP, registered in Hong Kong, the People’s Republic of China (PRC), Australia, the United Kingdom, the European Union, and the United States.