MUMBAI: Executives at Nippon Life India Asset Management and Deutsche Bank’s asset manager DWS said global investors continue to view India as a key long-term market despite continued foreign portfolio outflows from equities.
Global investors may be in a temporary “wait-and-watch” mood, said Sundeep Sikka, managing director and CEO of Nippon Life India Asset Management Ltd. But India is clearly not a market they can afford to overlook, said Stefan Hoops, member of the management board at Deutsche Bank AG and chief executive of DWS.
DWS in November agreed to acquire a 40% stake in Nippon Life India AIF Management, the alternatives business of Nippon Life India Asset Management Ltd.
Hoops told Mint that market sentiment will always create short-term volatility—whether for a week, a quarter or even longer—while the long-term India investment story remains highly compelling.
“The bigger takeaway,” Hoops said, is that “Overseas investors increasingly want a seat at the table when it comes to India’s growth story and they do not want to miss the next phase of expansion.”
He also pointed to growing interest beyond large-caps, particularly in emerging small- and mid-cap businesses and unlisted opportunities, areas investors are expected to access through the AIF (alternative investment funds) route under the Nippon-DWS joint venture.
Over the past five years, the Nifty 50 has climbed 57.1%, but the real fireworks came from the broader market with the Nifty Midcap 100 surging 141.8%, and the Nifty Smallcap 250 rallying 114.7%.
According to Hoops, investors are increasingly drawn to long-term durable themes rather than temporary innovations.
Hoops said the attraction for investors extends beyond corporate India to the country’s infrastructure buildout, adding that global investors are convinced India will continue investing heavily in infrastructure, backed by clear government intent.
Hoops also said India is increasingly being viewed as a “standalone investment case” that global investors need to understand better, though he believes current global understanding of the country still lags its growing economic relevance.
“That’s precisely what makes India such an attractive opportunity,” he said, adding that investors are now looking beyond index-heavy sectors and hunting for opportunities in niche spaces and unlisted companies that remain under the global radar.
The idea, Hoops said, is to gain exposure to businesses and sectors that may not yet be represented in public markets but could become key beneficiaries of India’s long-term growth story.
Foreign institutional investors (FIIs) continued to cut their exposure to Nifty 50 companies, with holdings falling 260 basis points year-on-year and 210 basis points quarter-on-quarter to 22.2% in the March quarter, according to a report by Motilal Oswal Financial Services earlier this month.
Sundeep Sikka, managing director and CEO of Nippon Life India Asset Management, said the partnership goes beyond a simple “JV arrangement” for the alternates business and will also focus on offshore ETFs.
The larger objective, he said, is to create a broader investment platform spanning listed and unlisted opportunities, private assets and high-yield debt, while also enabling capital flows in both countries over time.
He added that as overseas investment limits continue to evolve, the partnership could open up greater access for Indian investors to DWS’s suite of global and government ETFs through its international network.
Sikka said one message consistently comes through in conversations with global investors, whether in Japan or Germany: “India can no longer be underweight, and it simply cannot be left out of any portfolio.”
“You can have a wait and watch policy for India to invest, but you cannot ignore India anymore.”
Over the past five years, the Sensex has returned around 50%, lagging several global peers. Japan’s Nikkei 225 jumped 115.9%, South Korea’s KOSPI surged 130%, Taiwan’s benchmark index soared 149%, while the NASDAQ Composite gained 95%.