Healthy diversification can involve searching for opportunities outside of Australia.
As many investors are aware, the Australian market has a heavy weight towards banks and miners.
In fact, the ASX 200 is one of the most concentrated developed-market indices on the planet.
A new report from Betashares has identified that Indian equities could be a hidden giant in global investing.
The ASX ETF provider said Indian equities have lagged the AI rally, but earnings, valuations and flows are now turning.
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Why has the Indian market been lagging behind?
According to the report, more attractive relative growth opportunities in other Asian markets recently have seen up to US$29 billion in cumulative Foreign Institutional Investor (FII) outflows in Indian equities within the first half of 2026.
Increased capital spending by US hyperscalers has boosted companies higher up the AI supply chain.
Meanwhile, India has largely not benefited from this trend.
The country has also been hit by Rupee weakness and the Iran war.
India's reliance on imported energy leaves its external balance particularly vulnerable to higher oil prices. The Iran war and resulting rise in Brent crude oil prices have increased the country's import bill, while a weaker rupee further magnifies the cost in local currency terms, adding pressure to inflation and the current account deficit.
Brighter path ahead
Despite these headwinds, Betashares believes there are some positive catalysts emerging.
These may drive further upside potential in India given how light investor positioning remains.
Earnings growth is showing signs of strength supported by income tax cuts and a recovery in credit growth with state-run banks leading the improvement, while automakers also helped as premium consumption pushed sales to new highs. The Nifty 50 index is forecast to grow earnings by 15.2%.
Additionally, policy is opening the door to foreign capital.
Beyond the earnings and valuation picture, policy measures at the national level should also provide a more supportive backdrop for Indian financial markets. The removal of withholding tax for foreign debt investors could help attract offshore capital into Indian fixed-income markets, while incentives for banks to increase dollar borrowing may improve foreign-currency liquidity.
How to invest in Indian equities
A simple way to allocate capital to the Indian market is through the Betashares India Quality ETF (ASX: IIND).
IIND aims to track the performance of an index (before fees, expenses and taxes) comprising a diversified portfolio of the highest quality Indian companies.
The index which IIND aims to track selects the 30 highest quality Indian companies based on a combined ranking of the following key factors – high profitability, low leverage and high earnings stability.
