India-focused investment management firm Bay Capital Partners expects foreign portfolio investors (FPIs) to consider reinvesting in India after the recent fall in market valuation.
The MSCI India index is currently trading at a forward PE ratio of about 18.5, which is slightly below its five-year historical average, paving the way for FPIs reconsider investment in India.
As India’s influence grows in global markets—evident in its rising position in the MSCI Emerging Markets Index—investors are increasingly recognising it as a cornerstone of global portfolios.
Keyur Majmudar, Managing Partner, Bay Capital Investment Advisors, said since January foreign portfolio investors have pulled out about ₹2 lakh crore.
The expectations is that whether 30-40 per cent of the money taken out of market can come back into the country, he added.
Robust economic growth
As global investors move away from China due to geopolitical risks, Bay Capital expects India to capture more capital, driven by its stable economic environment, growing digital economy, and entrepreneurial ecosystem. The firm believes India is poised to deliver robust economic growth and significant investment returns for patient, long-term investors.
Siddharth Mehta, Founder and CIO, Bay Capital, said institutional investors are reallocating capital towards India as the geopolitical risks surrounding China grow.
While China’s valuations may appear attractive, its long-term uncertainty makes India a more compelling choice. India’s youthful population, rapid digital adoption, and thriving entrepreneurial ecosystem make it an exceptionally strong long-term investment destination, he said.
“While margin tailwinds are dissipating and consumption credit growth is unwinding, India’s long-term growth story remains intact. We continue to believe the investment environment moving forward will be different from the last 2-3 years. A discipline bottom-up investing and ability to invest with a 5-year horizon and temperament will be key differentiators,” he added.
Bay Capital believes consumption, digitisation, financialisation and knowledge-based outsourcing to be the key investment themes in India which has remained the consistent compounder among emerging markets.
The company advocates for a long-term investment approach, asserting that a 5-7 year horizon minimises risk and maximises potential for compounding returns.
With a GDP nearing $4 trillion, India’s importance on the world stage continues to rise, positioning it to capture a larger share of global capital.
