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Recession or No Recession, India Continues To Woo The Foreign Investors

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Amidst all the talks of slowdown, cut backs it is heartening to see the AIRTEL ad with Madhavan telling Vidya Balan “Pyaar me no cutbacks” which translates as “There should not be any cutbacks in love”. But, what has this got to do with this post you may ask?

Well there is, because The Foreign Investors still continue to show their love towards India even when the liquidity crunch is looming large on the global economy.

The start of 2009 saw some real good alliances being formed between the Indian and Foreign Corporates. However, with the Banking and Finance Industry collapsing like 9-pins and all the dirt coming out from under the carpet, it became a worrisome affair. It felt like Spending power has come to a stand still and the businesses will struggle to survive lest be able to expand across geographies. But India has belied the thought process by still being seductive when it comes to luring the money from the west.

Foriegn Investment

The past few months saw a few noteworthy announcements which testify the love for India as an Investor’s paradise:

Japan’s Shinsei Bank to start mutual fund operation in 3 months:

  • It will start with an equity, a liquid and a bond fund, part of a plan to launch at least six funds in the first 12 months of operation
  • The firm hopes to break-even in the three to five years, he said.
  • Rakesh Jhunjhunwala, has a 15 percent stake In the AMC.

If these features are anything to go by, they speak a lot about the growth potential in Indian Markets. 6 funds in 12 months time frame should give the investor enough flexibility to choose from and with the company having a break even target of 3-5 years, they clearly think that the target market will respond positively.

Moreover, with Rakesh Jhunjhunwala owning a stake in the firm, Shinsei might just be worth its money.

However, it will interesting to see if Shinsei is able to understand the pulse of Indian Markets.

Norwest Venture Partners (NVP) picks up stake in National Stock Exchange for Rs 250 crore

If the recent bull run of the Indian stock markets did not make you happy, you might give it one more thought. The Silicon Valley headquartered fund has picked up a 2.11% stake in National Stock Exchange (NSE) from IL&FS Securities Services Ltd in a secondary transaction for Rs 250 crore. The deal has been done for cash, valuing the Mumbai-based exchange at over Rs 12,000 crore. It is not the deal that is pleasing; it is the valuation that signifies that India remains a great bet for Foreign Institutional Investors.

Here are a few transcripts from NVP executives, India

"The NSE is regarded as one of the best operated exchanges globally, with world-class technology systems, a proven management team, and a wide range of products and industry leading processes that are unrivaled in the industry” said Pramod Haque, Managing Partner, NVP.

“The Indian market continues to show great potential and the fundamentals of the Indian economy are strong. NVP is pleased to align itself with the largest stock exchange in India, whose in trenched market position, high liquidity, and national network footprint are incomparable, and future growth opportunities are extremely promising,” said Sohil Chand, Managing Director, NVP India.

I truly believe that Indian markets offer a lot of potential for Investors, both domestic and global. However, it is the dynamic mood of the Indian consumer that has made it difficult for some foreign players who have failed in the past.

On another note, writing this post got me thinking. If we are so lucrative for the west, why is the Indian Corporate sector so dependent on foreign markets? When there is gold buried in your land, why go for the shiny silver in the west.

What are your thoughts on the same?

**Today’s post has been sent by an anonymous blogger, who is working in the field of Finance and Stock Markets. You can post your thoughts and questions and he will be more than happy to answer them.

  1. Anonymous says

    @Philip Agree with you here, Stable governments are no doubt a sure fire way of attracting FDI. A stable government makes for stable policies and hence, the foreign investors can invest with a longer time frame.

  2. Ankit says

    @Vikram
    India did get affected due to the recent slowdown.There is no denying that fact.However,what foreign investments signify is that our economy is still considered strong and stable, and thats a good sign.
    Moreover, with more foreign players joining, it will only create competition with the local vendors and competition always gives way to better products/services
    Moreover, India suffered because we have focused too much on the west, whereas there is so much available in India itself

  3. Philip says

    India attracted close to 40 billion USD in FDI last year. And i believe thats a great achievment considering the fact that a few years ago we used to struggle attracting even 5-10 billion.

    The flow is only going to increase post budget as India offers them a stable govt for the next 5 years.

    1. Arun Prabhudesai says

      Philip you are absolutely right and I have not doubt in my mind that 2nd half of this year and first of next year will see probably the biggest jump ever in FII Investment. Simple reason, None of the developed economies, or so called “open Economies” can come out of this recession before 12-18 months time period. Alternatively, India (and China) posting close to 8-9% growth would make our markets so lucrative that FIIs will not have any options to move Funds to India.

  4. Vikram says

    I Like This Post…
    But Some Know About Recession…
    How India get Affected.

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