Let the India party continue...

Among the movers and shakers in India's financial capital, there is a distinct sense of optimism about the future

The spirit of Mumbai remains high despite the grey cover over the sea and the ongoing construction in the city, which some compare to simultaneous building of multiple Nariman Points. This is because the who’s who of the financial capital, ranging from bankers to insurers and private equity majors to regulators, are looking at the good news package that India has to offer. While pollution is the talk of the town, clearly the business conversation in Mumbai, a city known for its resilience, leans towards the glass half full.

Seen together, comments made at the many panel discussions, fireside chats, and speeches during the recently-concluded two-day banking and financial sector summit organised by this newspaper in Mumbai capture a mood that’s buzzing with optimism about India (nobody quite mentioned Bharat though). Giving the sunny theme a final touch at the last session of the summit was Reserve Bank of India Governor Shaktikanta Das with the line, or one could say the headline, that India’s Q2 GDP number will surprise on the upside. Apart from that, a feeling of early Diwali in terms of celebrating India was all around.

Here’s a collection of what some of the movers and shakers feel about the India story at this point. Noted banker K V Kamath set the mood in the very first session with his remarks on digital economy and talent in India, as opposed to the general grouse on human resource (HR) crunch. His point was that in a country like India with a vast pool of people, any talk of HR crunch showed the failure of an organisation and nothing else. On the digital economy, he believes it will grow to 20 to 25 per cent of the overall economy in the next few years from the current 5 to 7 per cent.

Renowned market strategist Chris Wood endorsed India as the next big global opportunity, while stating that India is set to grow at a minimum of 6 to 7 per cent. His thoughts: “India is the best growth story in the world…. India is the best domestic equity story in emerging markets….. India is going to repeat the cycle of 2002-2009 (when India massively outperformed in the Asian context).’’ On a similar note, International Financial Services Centres Authority Chairman K Rajaraman pointed at the growing popularity of the market in India. “More and more people are entering the financial market, which shows that investors’ trust is going up.’’

The mutual fund universe too sent out positive vibes. Mahesh Patil, chief investment officer at Aditya Birla Sun Life, spoke about the “enough levers’’ that India has to grow at 6.5 per cent. Businessman and prominent investor Raamdeo Agrawal gave confidence to the audience: “In the next five to 10 years, Sensex will go up 2x and 4x, respectively…. We are looking at a tsunami of equities in the next 10 years.’’

Ridham Desai of Morgan Stanley focused on the stability narrative. “India has made tremendous progress in macro stability, ’’ he said. And that, “the Fed has raised rates at the fastest pace in 40 years, yet it has not made any impact on India.’’ An even more bullish statement followed: “We are in a 30 to 40 year bull market. We are nowhere close to a bubble territory.’’ Established leader in the financial services industry Andrew Holland carried on with the celebratory mood, saying, “India is in a good spot…” According to Prashant Jain, seen as a poster boy of the mutual fund (MF) industry, India is structurally well-placed to deliver over the long term.  

The world of funding is also mostly in sync with the positive mood, though funding winter continues to be a reality in the startup space related to venture capital investments.  “There’s no negative trend at all in PE investments. In fact, there’s a secularly upward investment trend in this space,’’ said Renuka Ramnath, founder of Multiples Alternate Asset. Amit Chandra of Bain Capital provided the numbers to make his point. “Private investment accounted for one-fourth of foreign investment in India a few years back. Now it’s two-thirds of the foreign investment.’’ He clarified that the funding winter is largely a venture capital-driven trend. True that unicorns have hardly come up this year, but the thing to look at now is the initial public offering (IPO) party all over again, as some of the marquee names reminded the audience.

Indeed, on the IPO party, EY’s latest report says that India has emerged a global leader in the number of IPOs year-to-date in 2023. It says that in the third quarter of 2023 alone, there were 21 IPOs in the Indian market, compared to only four in the corresponding period in 2022.

In the small finance space, there’s hope and aspiration, as Ittira Davis of Ujjivan Small Finance Bank pointed out: “The tech revolution that has happened in the UPI space will start happening in our space as well.’’ Public sector banks (PSBs) narrated their happy story as well. Ashwani Kumar of UCO Bank said: “The growth momentum will continue…’’ Similar sentiments were shared by K S Raju of Canara Bank: “Steady growth will continue for years together.’’ State Bank of India Chairman Dinesh Khara ruled out any concern on the asset quality front in the foreseeable future, while announcing the entry of Yono 2.0.

Taking away a bit from the overall cheer was the mention of global geopolitical risks and their possible impact on India. But mostly, any cautionary advice on these risks came with a qualifier that the impact on India is likely to be limited. Nobody seems to mind the celebration as long as it lasts.