It is a common phrase now that “there are many India(s) in India” and this essentially sums up our entire belief on the India story. India is a secular market with a large working population that has created multiple markets across the value spectrum. With growing middle class families and a large bottom of the pyramid opportunity; the country offers well defined markets for both aspiring as well as basic services and products. This gives us the opportunity to explore, identify good quality and high growth potential companies from a large sample of over 7000 listed companies.
Having said that, the business environment is difficult in India and that is both a boon and a bane. We call it the Indian Paradox. From the business person’s point of view, India is a difficult place to do business owing to complex government regulations, lack of uniformity, sub-par infrastructure and weak enforcement of law. However, history is peppered with visionary entrepreneurs who have seized the India opportunity and has found a way to build substantial businesses that are hard to replicate. These companies erect competitive barriers and earn high return on capital. Moreover, India also ranks high (8th) in terms of protection of minority interest, surpassing China (134th), Japan (36th) and United States (35th). This ratifies our belief that Indian businesses are largely minority shareholder friendly.
Make in India initiative by the government is an ambitious national program initiated to leverage on India’s core strength of human resources, strong base of entrepreneurship and a robust growing domestic demand. The target for India is to be amongst the top 3 manufacturing GDP by 2030. Many initiatives are also taken for ease of doing business including – Fast tracked approvals and clearances for industry and infrastructure; Transparent auction and allocation of spectrum and of key natural resources to create a level playing field for investors; Liberalized FDI regime to attract foreign capital in various sectors like railways and enhancing the limit to 49% in Defense and Insurance; introduction of composite sector caps for FPIs and other investors
Inspite of chequered history of economic reforms, India has been and will remain a good place to invest in equities
| Index | CAGR Returns over the years#.. | ||
| 5 | 10 | 15 | |
| Sensex (INR) | 5% | 11% | 13% |
| Sensex (USD) | -3% | 7% | 11% |
| CNX Midcap Index (INR) | 8% | 13% | 18% |
| CNX Midcap Index (USD) | 0% | 8% | 15% |
| S&P 500 | 10% | 5% | 3% |
| Hang Sang | -1% | 4% | 3% |
| Europe ETF* | 4% | 4% | NA |
| MSCI EM ETF* | -5% | 3% | NA |