Plays on India's massive emerging consumer class have kept investors optimistic on the market, but picking the right consumer group is key, Rana Gupta, managing director at Manulife Asset Management, told CNBC.
"If you look at consumption more broadly, you can break it into urban consumption and rural consumption," Gupta told CNBC's Squawk Box. "Rural consumption is not doing great at the moment because the government has reined in the fiscal spending on rural areas… [and] agri-commodity prices globally have fallen so therefore rural growth is moderating."
India's rural areas have suffered three bad monsoon years, the Economic Times reported last month, and sales of motorcycles and tractors, which are bought mainly by rural residents, have fallen. India's Finance Minister Arun Jaitley said last week that India's economic growth could rise to 8 percent this fiscal year if rural demand could be raised, compared with expectations for around 7-7.5 percent growth, the Economic Times reported.
But while rural consumers aren't feeling flush, urban consumers are, Gupta said.
"The benefit of oil price decline, lower inflation and lower rates is helping the urban consumer and also there's a pent up demand," Gupta said. "We are very bullish on categories that are seen as aspirational in an Indian context and have very lower penetration."
Manulife is positive on white goods, such as air conditioners, and premium motorbikes with engine power above 300cc.
Getting bets on India's consumer right could pay off: Shilan Shah, an India economist for Capital Economics, estimated in November that the consumer market could more than double to be worth nearly $3 trillion by 2030.
But many investors have struggled to find the best ways to tap India's emerging middle class. Analysts estimate that anywhere from 100 million to 300 million people out of India's around 1.2 billion total population can be considered middle class.
But consumption growth has slowed since 2011 amid what some experts said was a substantial overestimation on how many people could pony up for consumer products.
Dheeraj Sinha, author of India Reloaded: Inside India's Resurgent Consumer Market, told CNBC in November that with about 600 million people lacking access to clean drinking water and only around 56 million with access to cars, the middle class was much smaller market than many estimated.
Meanwhile, there are other once-popular parts of India's market that Manulife is now leery of holding.
While India's information technology sector has grown at a healthy clip over the last decade, "the base is really quite high so it's quite natural to assume that growth rates from here on will not be in high-20s, but rather in mid-teens to low teens," Gupta said on Tuesday.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1