Why Patient Equity Still Sees Opportunity in India | Today’s news

When markets become restless, daily price movements can dominate the economic conversation. Foreign sales become a country’s verdict, a weaker currency feeds doubt, and individual disappointments become evidence of a wider problem. These signals deserve attention. However, assessing India’s prospects also requires examining what businesses, borrowers and investors are doing with a longer horizon.

Two recent events provide this perspective. Government approves Fairfax subsidiary as strategic buyer for proposed sale of 60.72% stake in IDBI Bank for approx ₹52,878 million crowns. Separately, Blackstone’s Jon Gray outlined an ambition to increase the firm’s investment in India from around $50 billion to $100 billion over five years. These represent considerable confidence in India’s future.

Read also | CSB Bank merger with IDBI Bank likely after Fairfax deal

Having worked closely with Prem Watsa and Fairfax, I have seen their willingness to support businesses through difficult times. Their experience also teaches caution. Transforming a smaller private sector bank in South India took years of investment in technology, diversification and scale. The investment in the leading PVC producer also faced setbacks. Patient equity needs proper execution, realistic expectations, and a willingness to course-correct.

Quick answers to key questions

•5 QUESTIONS

The proposed purchase of 60.72% stake for ₹52,878 crore signals that a major foreign investor is willing to take a long-term position in the Indian banking sector. It also reflects the government’s willingness to give a greater role to private capital.

The article points to India’s growth prospects, favorable demographics, rising household investment and stronger corporate and bank balance sheets. These factors can create opportunities when market prices fall more than business fundamentals justify.

Monthly SIP contributions hit a record ₹ 32,490 crore in September, indicating continued participation by domestic savers despite a weakening market. These recurring investments deepen markets and expand the base of domestic investors.

Investors should consider valuation, yield and currency risks, as well as global interest rates. The article also highlights the problems caused by a deficient monsoon, inflation, high oil prices and India’s need for capital inflows to help finance the current account deficit.

The article argues that removing LTCG on truly long-term equity investments could attract patient capital and that extending relief to domestic investors could encourage household wealth creation. He presents it as a political view, not a confirmed change.

Portfolio investors deserve a fair hearing. Their sell-off may reflect concerns about valuations, earnings, currency risk and global interest rates. Extraordinary investment in AI infrastructure also competes for global capital. This helps explain the environment in which allocations change, although it cannot explain every outflow from India. When reallocations push prices beyond what business fundamentals justify, they create opportunities for discerning long-term investors. Experienced investors recognize this possibility.

India offers a compelling foundation. Its growth is faster than other major economies: real GDP grew by 7.8% in April-June, and the IMF forecasts 7% growth for FY27. Its favorable demographics add depth to the opportunity. A large working-age population can sustain production, consumption, and savings for years, provided education, skills, and employment keep pace.

Read also | What’s the confusion about the GDP growth numbers?

Indian households demonstrate their own confidence. Monthly SIP contributions to mutual funds hit a record high ₹32,490 crore in September despite a weakening market. These recurring savings reflect a growing willingness to participate in the country’s corporate future. They also deepen markets and provide a broader base of domestic investors.

This is important for foreign investors. Confidence in market entry depends in part on confidence that an orderly exit will be possible. Blackstone’s Gray highlighted the strength of India’s public markets and trading opportunities. Apart from liquidity, India offers a vibrant democracy, an independent judiciary and established legal protections. Faster dispute resolution and more consistent enforcement would further strengthen these institutional advantages.

The financial foundation has also improved. Crisil estimates that median corporate leverage has roughly halved over the past decade to around 0.5x by March 2026. Banks’ gross NPAs stood at 1.68% in June with a robust capital adequacy ratio of 17.78%. Healthier borrowers and lenders give expansion a firmer foundation. Icra also shows good repayment performance in rated secured retail securitization pools, although the unsecured segments require scrutiny.

Public investment reinforces this power. Central government capital expenditure reached approx ₹5.10 lakh crore during April-August. Better transport, power and digital connectivity create demand while increasing productivity and expanding markets for businesses.

There are several significant challenges. A deficient monsoon threatens farm incomes and food prices. September retail inflation hit 5.54% as high oil prices weigh on household budgets and business costs. India’s central bank’s rate hike in October demonstrates caution. Policy must provide calibrated growth support without losing sight of inflation.

Dependence on oil also creates a recurring problem with external financing. Services exports and remittances offset much of the goods trade deficit, but India generally runs a current account deficit. The gap requires a net inflow of capital or a draw on reserves.

FCNR special deposit schemes can quickly mobilize foreign currency, while banks’ open forex position limits can help manage volatility. These measures have their place, but deposits are maturing and restrictions cannot create a permanent inflow of foreign exchange. Sustainable equity and debt investment must help finance more production capacity and more jobs.

Read also | FCNR’s increase in liquidity comes with margin costs for private banks

Therefore, India should offer a reliable welcome to investors through predictable taxation, timely approvals and straightforward entry and exit. Foreign capital complements domestic savings by expanding financing and sharing risk. Our competition for internationally mobile capital comes from other investment destinations. Attracting it under reasonable terms can improve the prosperity of Indians.

Tax exemption for eligible foreign investors in government securities is an encouraging first step. The bigger opportunity lies in stocks. The Finance Minister’s openness to hear investors’ views on LTCG taxation is welcome.

Removal of LTCG tax on truly long-term capital investments could attract patient capital. Extending relief to domestic investors would avoid overt discrimination and encourage household wealth creation. In my view, the resulting expansion of investment, business and taxable economic activity could more than offset the initial loss of revenue over time.

Domestic savers and experienced global investors express confidence by their actions. India should build on this confidence with policies that attract permanent capital and convert it into productive businesses, better jobs and higher living standards.

Nirmal Jain is the founder of IIFL Group