Investing in uncertain times

The other day, during a routine visit, the family doctor asked me: “What’s happening with the markets? The economy is slowing down, but the markets show no signs of that and are booming. How can that happen?” The good doctor isn’t alone. This dichotomy has been the talk in business and investment circles for some time now. The economy, sputtering at 4.5% gross domestic product (GDP) growth at last count (the IMF pegs India’s 2019 growth at 4.8%), shows little signs of a major recovery, but the benchmark equity indices—the S&P BSE Sensex and the Nifty 50—gained 13.8% and 11.5%, respectively, last year, befuddling market watchers. In such times, while investors may be attracted by the rising indices, prudence will demand a close, hard look at the fundamentals and a safety-first approach to investing. “I’m shifting my investments even more to mutual funds,” the doctor added. Going by the figures, many investors seem to be doing that, as mutual fund investments and systematic investment plans (SIPs) saw a rise in inflows in 2019, compared to the previous year.

The Fortune India Investment Special, then, comes to you at a time when investors need good, sound advice on investment options, and pointers to how the markets are likely to behave in 2020 and beyond. As Fortune India’s Neha Bothra and Rajiv Bhuva find out after speaking to multiple market experts, the common theme appears to be that of adopting a longer-term approach, and investing in companies where the standards of corporate governance are proven and of a high standard. This was the broad theme for most major fund houses in 2019, and is likely to be so in 2020 as well. Experts we spoke to also point out that while the trend has been that of broader indices moving upward aggressively, mid-caps and small-caps lost ground last year. There was also divergence within the Nifty 50, for example. Then there are the debt and commodities markets, and the real estate sector, where investors need to make informed investment decisions. This Investment Special aims to give readers—and potential investors—a broad view of how the various markets have behaved, and what is likely to be the trajectory in the coming year. Some of the biggest and sharpest minds in the investing world share their strategies with us, and tell us what they see as the road ahead. With the Narendra Modi government in Budget mode, these strategies are all the more relevant.

The cover story takes a detailed look at the investment philosophy of one of the world’s best-known private equity (PE) firms, the U.S.-based Warburg Pincus, which has been operating in India for over 25 years, partnering some of the country’s tallest entrepreneurs and business leaders. Bothra speaks to Charles ‘Chip’ Kaye, the global co-chief executive officer of Warburg Pincus, and also to the top management of the PE firm’s Indian arm, to understand exactly what makes it the go-to PE firm for several large Indian companies. What comes through is the story of a PE giant which believes not just in making profitable investments and exits, but also in partnering entrepreneurs, giving them a helping hand, and ensuring they grow their businesses in the best way possible. Some of India’s most iconic business leaders—from banker Uday Kotak to telecom czar Sunil Mittal and HDFC boss Deepak Parekh—share with us their experiences of how Warburg Pincus helped them with sound strategic advice when they needed it the most. While PE firms generally have a reputation of being pushy investors, the Warburg Pincus story in India stands as a welcome exception.

This was originally published in the February 2020 edition.