India's Capital Markets In Long-Term Bull Cycle, Says DAM Capital CEO

India's equity markets are in a long-term bull cycle, supported by robust economic growth, increasing market depth, and secondary exits, according to DAM Capital Advisors Ltd.'s Dharmesh Mehta. The country's capital markets are set for sustained growth over the next decade, with bullish undertones for investors, according to the chief executive officer and managing director of the IPO-bound firm.

"As long as the top line grows, operating leverage is very high," he told NDTV Profit, focusing on the scalability of Indian businesses. This dynamic is expected to continue driving profitability across industries, creating a fertile environment for IPOs.

Mehta underscored the need for large-scale capex and funding to meet growth expectations over the next three to five years, and even decades.

"The India story is very strong. Capital markets should do very well," Mehta added, pointing out, that while short-term downturns are inevitable, they are merely speed bumps on an otherwise upward trajectory.

A key indicator of India's evolving market maturity is the rise of large-scale exits. "Large exits are happening in India's secondary markets, which was unheard of in earlier years," Mehta remarked.

This trend has created a cycle. Investors now view the Indian stock market as a viable exit platform for entire companies, increasing their confidence to deploy capital. "This brings bullishness for people to invest more in the country," Mehta explained.

The role of mutual funds has been pivotal, with their rising inflows enhancing market depth and creating sustainable liquidity.

"Whenever you have the kind of outperformance we've seen in two-three years, markets always stabilise," he said, noting that such phases are cyclical and healthy for long-term growth.

Mehta is optimistic about the next wave of growth, driven by a bottoms-up approach, as smaller companies and sectors come into focus.

In the global context, India stands out among emerging markets, offering a combination of stability and opportunity. This geopolitical positioning will further enhance the country's appeal to foreign investors, Mehta said.