A steady return of foreign institutional capital, a concrete trade deal with the United States and a pickup in private capital expenditure will drive the next leg of growth in the Indian stock market, Saurabh Mukherjea said.
The sentiment of foreign institutional investors is turning positive and fund managers are eager to bring money back into India, Mukherjea, founder and chief investment officer of Marcellus Investment Managers, told NDTV Profit in a televised interview.
"My discussion with FII managers over Diwali revealed they are keen to invest back in India. The private credit boom in America is dissipating. There's a realisation that after an India-US trade deal, it makes sense to put money here," he said.
Overseas funds have pulled out Rs 1.47 lakh crore from Indian equities so far in 2025. After three consecutive months of selling, October has recorded a positive flow of Rs 7,329 crore so far, as per NSDL data.
India's benchmark Nifty and Sensex have edged close to their September 2024 peak, driven by consistent domestic inflows that have supported the market amid FII exodus.
Saurabh Mukherjea said the second trigger will be an India-US free trade pact that is likely nearing a conclusion. This, however, will inspire confidence only if the deal amounts to significant tariff reduction on Indian goods to 15%.
India and the US want to conclude the first tranche of the trade pact by the end of the year. The proposed agreement aims to more than double the bilateral trade to $500 billion by 2030 from the current $191 billion.
President Donald Trump has claimed India has agreed to reduce Russian energy imports in exchange for tariff relief, a key demand from Washington. Half of the 50% US tariff on Indian goods is a penalty for Russian oil purchases.
The third factor, according to Mukherjea, is a rise in private capex that has been the laggard in India's economic growth. "Private capex in the first half of FY26 is up. We have to see if it sustains in the second half of the year," the fund manager said.
As per a Business Standard report, the total value of new investment projects surged 62% in the September quarter to cross Rs 15 lakh crore, taking overall investments in the first half of FY26 to Rs 34 lakh crore, 22% higher than the previous six months.
He highlighted recent large project announcements from the likes of Larsen & Toubro Ltd. and Google to back up the point.
Saurabh Mukherjea is known for his "Coffee Can Investing" philosophy — that advocates for holding a portfolio of high-quality, fundamentally strong companies for at least 10 years.
Watch the full interview of Saurabh Mukherjea:
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