Indian markets are currently estimated to be around 10% overvalued, with limited potential for further re-rating. Market returns are expected to align with an earnings growth rate of 12-13% CAGR, reflecting India's status as a lower inflation country and the minimal scope for margin improvements across sectors.

Indian valuations are approximately 15-25% above their 10-15 year averages, although India merits a premium due to its growth potential and significantly lower cost of capital. Reduced volatility, driven by strong domestic inflows, supports higher valuation multiples.

In the near term, growth in large-cap stocks is anticipated to be around 12% CAGR, while small- and mid-cap growth is expected to be considerably lower compared to their larger counterparts in the same sectors.