Building foresight capability to anticipate risks a priority: Sebi Chairman

As the three-day premier summit came to a close, a clear call emerged: Regulate wisely, innovate responsibly, and build a resilient, tech-driven foundation for India's financial future

The three-day Business Standard BFSI Insight Summit 2025 concluded on Friday in Mumbai with a strong focus on responsible technology adoption, market resilience, and the future growth trajectory of India’s financial ecosystem. 

Key voices from regulators, industry leaders, fund managers and market strategists shared deep insights across a rich agenda of 11 sessions, reinforcing a collective commitment to building a resilient, innovative and inclusive financial market framework. 

Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey opened the day by highlighting the critical need to adopt emerging technologies such as artificial intelligence (AI) responsibly in financial markets. 

Emphasising stronger cyber preparedness, Pandey outlined Sebi’s focus on developing foresight capabilities to anticipate risks and shocks. “True resilience lies in foresight — the ability to read trends early, anticipate risks and prepare the system to withstand shocks. Building such capability, both within Sebi and across market institutions, will remain our key priority,” he said. 

He noted that India’s capital markets have evolved into a pillar of economic growth by becoming more efficient and inclusive through reforms, but cautioned about the ecosystem’s increasing complexity due to interlinkages among banks, corporates, mutual funds, insurers, fintechs and pension funds. “A disruption in one segment can transmit rapidly to another,” he said, stressing the need for coordination through the Financial Stability and Development Council (FSDC). 

Despite these challenges, Pandey affirmed that India’s financial system stability rests on the shared commitment of regulators and market participants to safeguard stability while enabling growth.

 

Replying to a question regarding selloff by foreign portfolio investors over the past few months during a fireside chat, he said “Based on my interactions with FPI investors and other foreign market participants, their confidence in India remains very high. They believe in India’s long-term growth story and also see short-term opportunities.”

 

“FPIs hold about $900 billion in market cap in India… Outflows of $45 billion on a $900-billion base is not very significant,” he noted.

 

Former Sebi Whole-Time Member Ananth Narayan G reflected on his tenure, emphasising the value of practitioner experience in policymaking to bring diverse perspectives and effective regulatory frameworks. He spoke about the delicate balancing act regulators must perform between avoiding “type 1” errors (allowing market failures) and “type 2” errors (over-regulating and stifling growth). He highlighted Sebi’s establishment of a high-level committee to strengthen ethical governance and disclosure for regulators, underlining ongoing efforts to maintain market integrity while fostering capital formation.

 

A vibrant panel of mutual fund CEOs discussed growth prospects for the domestic MF industry, where assets under management (AUM) have topped ₹75 trillion and investor numbers have surpassed 50 million. Industry leaders conveyed optimism about entering a longer expansion phase driven by increased retail participation, digital adoption, and trust-building.

 

D P Singh, deputy MD and joint CEO at SBI MF, the country’s largest fund house, projected that the industry could double to ₹100 trillion in four years even with a 20 per cent growth rate.

 

Navneet Munot, MD and CEO at HDFC AMC, stressed the importance of building “trust” as the fifth key pillar alongside track record, transparency, technology and training to sustain long-term investor confidence.

 

Discussions around the International Financial Services Centre (IFSC) at GIFT City showcased its transformation into a thriving financial hub within five years, achieving more than 1,000 registrations and $100 billion in banking assets. Experts noted that business segments at GIFT City now extend well beyond traditional banking and insurance.

 

Market mavens speak

 

Ridham Desai, MD and chief India equity strategist at Morgan Stanley India, reiterated his structural bullishness on India’s equity story despite market underperformance this year compared with global peers. Since turning bullish in 2014, Desai said India’s economic transformation, including a sharp reduction in oil dependency and a shrinking current account deficit, has fundamentally strengthened its market resilience. He cautioned investors that equities require a long-term horizon of at least five years to navigate volatility, adding that being bullish does not guarantee annual positive returns.

 

His insights emphasised patience and conviction in India’s evolving economic narrative.

 

Mark Matthews, managing director and head of research for Asia at Julius Baer, described 2025 as a surprising year for global markets, with strong rallies in the US and emerging markets versus India’s moderate returns. He attributed India’s relative underperformance to China’s return as an investable market and disappointing corporate earnings growth.

 

However, Matthews remains optimistic about India nearing an inflection point, supported by GST cuts, monetary easing and fiscal incentives that could reignite double-digit earnings growth by the 2027 financial year. He also highlighted exuberance around AI-related tech stocks but warned of frothy valuations, while still projecting possible market gains in the coming year.

 

Shankar Sharma, founder of GQuants, shared how AI has reshaped his investment strategy, shifting to an 80-90 per cent data and AI-driven approach, allowing him to identify opportunities at scale. However, he expressed caution about AI’s overuse, particularly in contrarian thinking, warning that AI-generated answers often reinforce existing biases. Sharma said he does not foresee AI completely replacing human judgment in investing, as human intervention remains essential to maintain perspective and balance. He emphasised AI’s role as a tool rather than a substitute for investor intuition.

 

Chief investment officers (CIOs) from leading mutual funds urged investors to maintain realistic return expectations and stay disciplined despite a challenging year marked by weak performance. S Naren, CIO at ICICI Prudential AMC, highlighted a moderately improved economic environment compared with the previous year, turning slightly more positive on equities.

 

Sailesh Raj Bhan, CIO for equities at Nippon AMC, emphasised balanced markets, earnings-led performance in large caps, and the importance of aligning expectations with fundamentals rather than chasing high returns.

 

Meanwhile, a panel of investment experts highlighted the increasing importance of stock-picking and patience in achieving better equity returns in the future. They advised investors to look for bottom-up opportunities and to focus on fundamentals, disciplined investing and risk management in an environment lacking obvious thematic plays. They also pushed for prioritising long-term returns over short-term valuations. The panel acknowledged that the current market phase reflects a return to normalcy after the post-pandemic bull run and advocated cautious optimism.

 

Leaders from the broking industry described the current period as a strategic reset following two years of rapid account openings and retail activity. Trading activity and regulatory absorption are stabilising, ushering in a phase focused on sustainable growth, quality users and deeper market participation. Industry insiders expressed confidence that this “reboot” will unlock the next decade of expansion driven by rising household incomes and steady economic growth.

 

The Business Standard BFSI Insight Summit 2025 thus closed with a strong narrative on technology’s transformative potential, prudent risk management and long-term growth optimism underpinning India’s financial markets. Participants called for responsible innovation, investor education and sustained collaboration between regulators and market players to secure a resilient and inclusive future for the BFSI sector. This groundswell of insights paves the way for India’s financial ecosystem to capitalise on emerging opportunities while safeguarding against evolving risks.