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HomeMarket NewsA $45 bn fund CIO sees ‘dramatic’ FPI flows into India over 3-4 years, bets on private banks
Harish Krishnan, Co-CIO and Head – Equities at Aditya Birla Sun Life Asset Management Company, which manages assets worth over $45 billion, expects earnings growth to accelerate to 12-13% over the next 12-18 months.
India could witness a sharp uptick in foreign portfolio investment (FPI) over the next few years, driven by global realignment and improving domestic fundamentals, according to Harish Krishnan, Co-CIO and Head – Equities at Aditya Birla Sun Life Asset Management Company, which manages assets worth over $45 billion.
“We're going to see some dramatic flows coming in from foreigners. I wouldn't be very surprised that over the course of the next three-four years, we're going to see a very different zone of foreign portfolio investment participation in Indian capital markets,” Krishnan said.
He expects both direct equity and private equity flows to rise, adding that multinational corporations may also choose to reinvest earnings in India in a “material way.”
Among sectors, Krishnan is most bullish on private banks, calling them the most compelling bet in the current setup. He pointed to improved balance sheets, heavy tech investments, and reduced competitive intensity as key positives. “Five years back, every industrialist, everybody wanted to be a banker. Today, most people are staying away from being a banker citing significant regulations, and access to capital etc. … I think this sets up very, very well for the larger private sector banks.”
He also sees value in beaten-down private lenders. “We are also running a basket of very cheap, undervalued private sector banks, which are all trading below book,” he said, noting that a broader rerating could follow as the macro environment improves and capital access concerns ease.
On the recent market resilience amid India-Pakistan tensions and US-China trade news, Krishnan said, “Even if one were to look at how the Indian markets reacted during all these commercials, you know, it was a very measured kind of a correction, nothing in a very panic kind of fashion.” He added that markets are likely to consolidate after the sharp rally from March lows but remain supported by improving earnings. “Markets don’t work on absolutes. They work on the rate of change,” he said, projecting earnings growth to accelerate to 12–13 percent over the next 12–18 months.
