A Resilient India with Economic Confidence

Asia's two largest emerging market economies, India and China, are expected to make up around half of global economic growth this year, with the rest of the region contributing another 20 percent. The International Monetary Fund (IMF) recently stated that India's economic growth in the current financial year is resilient, giving a lot of confidence to the capital markets in the country. India's GDP backs up this prediction. At current prices, GDP in the first quarter is estimated to be $447.44 billion against $394.13 billion in 2021-22, showing a growth rate of 13.5 percent, while nominal GDP is expected to stand at $788.64 billion with a solid 26.7 percent growth YoY.

These figures, representing government data, make India the fastest-growing major economy in the world, and this economic growth has translated to the domestic investment market in India. This trend has been catalytic in Retail investors, mutual funds, and PE/VC firms stepping up their domestic investments in the Indian market. According to an IBEF report, the combined share of Retail and High Net-worth Individual (HNI) investors and domestic institutional investors (DIIs) which includes domestic mutual funds, insurance companies, banks, financial institutions, pension funds, etc., reached an all-time high of 23.53 percent as of June 30, 2022, up from 23.34 percent as of March 31, 2022. This was on the back of a $15.57 billion inflow during the quarter.

This trend triggered the share of retail investors in companies listed on the National Stock Exchange (NSE) hit an all-time high of 7.42 percent on March 31, 2022, up from 7.33 percent as of December 31, 2021. Indeed, India's Private Equity (PE)/Venture Capital (VC) investment environment is brewing up an excellent climate, with increases in deal size, deal activity, and fundraising, not to mention improvements in term sheets and benchmarking practices. It's a perfect time to tell a few stories from the capital markets segment.