All eyes on Samvat 2081: Unveiling India’s investment landscape for 10 years – CaFE Invest News

By Deven Choksey

It is said that next 10 years are going to be GOLDEN years of India’s economy and market wealth. Let me reflect on those opportunities as I see it, which will shine brightly for investors.

Between last Diwali in November 2023 and this one, India’s market capitalization has grown to over $5 trillion, and the GDP grew to $4 trillion. Over the past two years, from Samvat 2079 – 2080 (2022 to 2024), India’s market capitalization surged by approximately Rs 10 lakh crores ($1.2 trillion), showcasing a growth rate of 30%. This impressive increase reflects the buoyancy of our collective financial prospects.

These indicators highlight the potential for both domestic and international investors to seize opportunities in the market.

As we embrace the festive spirit, let’s explore the invaluable gift we can offer ourselves and our families this Diwali: investing in India’s flourishing sectors, which are poised for remarkable growth.

The Value of Long-Term Investing

This Diwali, consider the vast opportunities available in the market. By smartly allocating financial investments to promising sectors, you can see your investments grow dramatically over the next decade.

For example, if you invest Rs 20,000 each month in equity with a target 30% compound annual growth rate (CAGR) over next 10 years, you would end up investing about Rs 24,00,000 (Rs 2,40,000 annually) which will grow your wealth to Rs 1.46 Crores.

Let me expand on the list of opportunities –

Why We are Bullish on Equity Investments

In the past decade, Indian stock markets have shown strong growth, since 2014, market capitalization has increased significantly alongside steady GDP growth. By 2035, India’s GDP is projected to grow to around $7 trillion and the market capitalisation to grow to about $ 12 trillion from $5 trillion currently. India’s market and GDP are expected to rise in synergy, creating more wealth for investors.

Current Market Landscape

Market Size: The combined market capitalization of the Indian stock market is around ₹446 Lakh Crores or $5 trillion as on September, 2024.

Investment Avenues: Portfolio management services (PMS) and alternative investment funds (AIFs) have experienced impressive growth, with a CAGR of over 20% in the past five years.

Institutional Growth: Investments from life insurance, pension funds, and endowments are increasingly focusing on sustainable sectors.

AUM Growth: As of Sep’24, assets under management (AUM) in mutual funds have surpassed Rs 66 lakh crores and are projected to reach Rs 132 lakh crores in the next five years — a growth rate of about 15% annually.

About 42 lakh new investors have opened demat accounts every single month in H1FY25, already covering about 12% of India’s population. India’s financial landscape continues to evolve, supported by strong institutional investments.

Historical Context: Infrastructure Investments as a Growth Catalyst

History of last 100 years reveals that, every developed country of today have had 20 years in last century wherein they grew their wealth and size of economy by spending on infrastructure. Historically, infrastructure spending has driven economic growth. Let’s look at some global examples:

United States (1930-50):$500 billion contributed to GDP growth from $1.5 trillion in 1930 to $30 trillion in 2024.

Japan (1960-80):$1 trillion investment helped elevate GDP from $44 billion to $4 trillion in 2024.

South Korea (1970-90):Over $300 billion in infrastructure spurred GDP expansion from $12 billion to $1.6 trillion in 2024.

China (1990-2010): Investments exceeding $4 trillion grew GDP from $360 billion to $17 trillion in 2024.

India (2015-2035): The National Infrastructure Pipeline plans to invest ₹142 lakh crores (about $1.75 trillion) by 2030, expected to boost GDP from $4 -12 trillion, maintaining a 12% nominal GDP growth rate.

What This Means for Future Investments

The Government of India’s vision includes substantial investments in infrastructure and production linked incentive (PLI) schemes aimed at various sectors, including electric vehicles, textiles, and pharmaceuticals.

Major budget allocations, such as ₹11.10 lakh crores in the latest budget towards infrastructure and rural development, further illustrate this commitment.

Emerging Industry Trends: Where to Invest ?

Looking ahead, several trends are set to redefine India’s investment landscape:

Green Hydrogen: Targeting 5 million tons by 2030, with a total addressable market (TAM) estimated at $20 billion.

Renewable Energy: Aiming for 500 GW of capacity by 2030, with a TAM exceeding $65 billion.

Energy Storage Solutions: Rising demand for lithium-ion batteries and other storage technologies.

Semiconductors: Projected to reach $200 billion by 2035 due to government incentives.

Agri-Tech: Market size expected to exceed $95 billion by 2030.

Tourism: Market potentially reaching $40 billion by 2030 from $24 billion in 2024.

Innovative Technologies: AI market projected at $17 billion by 2027, expected to scale up further.

Key Players and their investments

Major companies are making significant commitments:

Reliance Industries: Plans for investments of Rs 84,000 crores in green hydrogen and renewables.

Adani Group: Committed to over Rs 4 trillion in renewable initiatives.

Tata Group: Investing Rs 96,000 crores to start with, to boost semiconductor manufacturing.

NTPC: Leading in renewable energy investments.

Another disruptor could be the cost of power

When energy is produced using renewables including green hydrogen, it could decrease electricity prices from Rs 9-12 per unit to Rs 3-4 per unit in next 5-7 years. This transformation will not only benefit consumers and industries but could also disrupt inflationary trends.

Conclusion: A bright future for investors

Although the market faces price corrections and may remain range-bound temporarily, investment opportunities do come up when price and time corrections results in creating under valuations in stocks. We are optimistic about higher spend on consumption; discretionary and non-discretionary, led by higher disposable income in the hands of masses.

Those companies who are catering to consumption-led growth in sectors like fast-moving consumer goods (FMCG), FMEG, Engineering R & D in IT & EMS segment, industrials, and manufacturing have a long runway ahead.

AI is emerging as a significant disruptor, enhancing production and lowering costs. We look around for enablers and users of tech and AI in every industry verticals while making investments.

Let’s remember that our investment choices can illuminate our financial futures—much like the lights of this festival. Sectors like green hydrogen, renewable energy, and innovative technologies present a unique opportunity to participate in India’s economic transformation.

Here are a few mantras to guide your investments over the next decade

Big is Getting Bigger: Larger companies have better abilities to grow and meet demands of resources. They can grow sustainably when they move ahead of trend in or lead the trends ahead of their peers

Disruptive Traits Count: Companies with innovative habits will create more wealth.

Focus on Long-Term Growth: Aim for 30% CAGR for 15x returns in your wealth.

Seek Expert Advice: Financial advisors can help you grow and protect your wealth with discipline.

Stay Grounded: Per capita income is expected to rise to about $10,000 from $2,800 in the next decade. Have patience. Avoid greed; significant wealth is being created, you will earn your share out of it.

I consider the present generation very fortunate. They have seen the struggles of the past, they have created lifestyle in present and they are sitting on wonderful prospects driving the future.

Invest for the future—it’s where you’ll spend the rest of your life.

(Disclaimer:  Deven R Choksey is the founder and managing director of DRChoksey FinServ. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}