India has significantly reduced its reliance on global investors, showcasing a growing financial independence, driven by robust domestic investments and strategic economic planning, according to Taimur Baig, chief economist at DBS Group Research.
Baig pointed out that during the global market turbulence in 2022, Indian markets remained resilient due to strong domestic investor activity, highlighting a pivotal shift in the country's financial dynamics.
The Indian markets rallied because domestic investors were putting in a lot of money and those days of waiting for cues from global investors as a source of bullishness or bearishness in India are "behind us", Baig told NDTV Profit in an interaction on Monday.
Baig's comment came as the overseas investors cashed out Rs 23,364 crore worth of Indian equities so far in 2024, according to data from the National Securities Depository Ltd., even as the equity benchmarks surged to all-time highs, crossing new milestones.
From a portfolio-management perspective, Baig endorsed Indian equities, citing their favourable risk-reward profile compared to fixed income.
Taimur Baig, chief economist at DBS Group Research. (Source: YaleNUS College)
GDP Data And Market Sentiment
Baig emphasised that India's markets have historically been high-multiple due to robust underlying growth, particularly in domestic demand and consumer cyclicals.
India has always been a high-multiple economy with few exceptions here and there over the last 20–30 years because underlying growth has been strong, particularly domestic demand consumer cyclicals, he said.
Despite concerns over debt trajectory, he suggested that higher growth in the gross domestic product could mitigate fiscal challenges, drawing parallels to a period 15 years ago when rapid nominal GDP expansion effectively absorbed large fiscal deficits.
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