It’s like a Goldilocks moment for India: Abhijit Bhave, CEO and MD, Equirus Wealth

The markets have to navigate a complex interplay of factors. These include global economic recovery, central bank policies, inflationary pressures, and geopolitical developments. While inflationary pressures have largely bottomed out, the key headline risk stems from geopolitics. The world is increasingly becoming fragmented, and that is driving the second risk: central bank actions. India has navigated the crisis of 2022 and the volatility of 2023 very well. We are moving ahead on the path of fiscal consolidation, manageable current account deficits, outperforming growth, and moderate external risks. For India, it is almost like a Goldilocks moment. While headline risks will persist, India will continue to maneuver and outperform.

While overall valuations appear elevated, certain sectors offer potential value opportunities. The technology and healthcare sectors, for instance, exhibit strong fundamentals and growth prospects, making them relatively attractive. Conversely, traditional sectors may seem relatively inexpensive, presenting opportunities for value-conscious investors. FY25 will be the year of large caps. One should be wary of the froth building up in mid- and small-caps. Selective PSUs will continue to do well.

While geopolitical tensions and monetary policy changes persist, India’s economic reforms, political stability, and favourable valuations relative to other emerging markets will help attract foreign investment. Debt flows could remain positive with index inclusion gaining momentum. Equity flows are fundamentally attractive with India’s growth outperformance; however, the headline external risks could keep the flows volatile for the short term. 

A cautious approach is likely to be adopted by central banks. The Fed pivot is clearly some time away. Underlying last-mile inflation led by services remains challenging, and labour along with growth resilience, is defying trends. Therefore, it is likely that the Fed has some more ground to cover. In terms of the RBI, we would think that the stance is somewhat clear: to remain cautious with global uncertainties.

Domestic transmission is still incomplete, and with FY25 inflation estimates at 4.5 per cent, the target of 4 per cent looks some time away. Furthermore, real growth at 7 per cent does not seem to need a rate cut push. Note that overall, while the Fed has hiked 525 bps, RBI hikes have been only 250 bps. So there is no rush to cut rates from the RBI before the Fed moves to a clear downward path.

HNIs are increasingly diversifying their portfolios beyond traditional asset classes. Trends include growing interest in alternative investments such as private equity, sustainable investing, and digital assets. HNIs are looking at locking investments into debt products with high interest rates, as we may be somewhere near peak interest rates. Opportunities in alternatives and the real estate space continue to evolve, offering investors avenues for portfolio diversification and potential returns. Some popular ones presently are private credit funds, rental yield funds, pre-IPO opportunities, as well as start-up funds.

The HNI broking business is experiencing significant growth, fuelled by increasing market participation and demand for personalized wealth management services. Equirus Wealth’s client-centric approach and emphasis on delivering tailored investment solutions position us well to capitalise on this growth trajectory. Investors are maturing, moving up the value chain, and looking to directly invest in equities. We are seeing a growing trend, specially in family offices that understand the risks and are willing to invest directly in equities.

Our plans revolve around enhancing offering innovative but client-centric bespoke solutions, improving client experience by leveraging the latest technological trends, and nurturing talent within our team. We recently launched our Equirus InnovateX Venture Capital Fund to fund and fuel innovation in tech startups in the space of SAAS, deeptech, and fintech, and I am happy to share that we have also completed our first closure within two months of the fund’s launch.