India's equity markets have faced significant underperformance, trailing Korea by 180 percentage points since peaking in late September 2024. Vikash Kumar Jain, MD and Head of Research at CLSA Investment, notes that this underperformance has compressed relative valuations and reset investor expectations. The CLSA India Bull-Bear Index, a sentiment measure, recently closed at 19.6% bullish, indicating a cautious but improving market sentiment. Currently, the Nifty is trading at around 18-18.5 times one-year forward earnings, aligning with its 10-year average, which marks a shift from previously stretched valuations. Jain sees a potential bull-case upside of 20-30% compared to just 10-12% a year ago. However, geopolitical risks, particularly in the Middle East, remain a wildcard that could impact market dynamics. Jain emphasizes that foreign institutional investor (FII) participation will be crucial for significant market recovery, as domestic institutional cash buffers have diminished. While he refrains from declaring a definitive market bottom, he believes the risk-reward scenario for patient investors is more favorable than it has been in recent years.