Higher commodity prices, geopolitical uncertainties, and moderating demand have increased downside risks, making foreign investors more cautious about Indian markets, said Jones George, executive director, Geojit Financial Services. Edited excerpts below:
What has recent market volatility taught retail investors about equity investing? Is investor mindset shifting from short-term gains to long-term wealth creation in India?
The ongoing consolidation phase since September 2024 has been an important learning experience, especially for newer investors. It has reinforced that equity investing is ultimately driven by fundamentals such as long-term earnings growth, business quality, and valuation cycles rather than short-term momentum alone. Over the past year, earnings growth moderated while valuations in parts of the market became elevated. This led to persistent profit booking by FIIs and created volatility across segments of the market. At the same time, one encouraging trend is the resilience of retail participation through SIPs and long-term investment flows. Investors today appear more willing to stay invested through volatility rather than reacting emotionally to short-term corrections. This indicates a gradual shift from short-term trading behaviour toward more disciplined long-term wealth creation.
Are Indian markets as weak as they look vs global peers?
From an FII perspective, there are currently relatively better opportunities in some developed and emerging markets, particularly around themes such as AI, advanced technologies, and comparatively cheaper valuations. However, India’s macroeconomic fundamentals continue to remain relatively strong. Economic growth remains healthy, the banking system is stronger than in previous cycles, and domestic liquidity has emerged as an important stabilising force for the markets.
In the near term, rising commodity prices, geopolitical uncertainty, and moderation in demand have increased downside risks and made foreign investors more cautious toward India. But structurally, India continues to remain one of the more compelling long-term growth markets globally.
Is India still too expensive for foreign investors?
Should investors increase exposure to foreign equities after India’s underperformance over the past 18 months?
Global diversification has increasingly become a well-established theme for Indian investors, and this trend is likely to strengthen further over time. International investing allows investors to participate in themes and sectors that may currently have limited representation in India. For example, opportunities linked to AI, semiconductors, space technology, and large global technology platforms provide diversification beyond domestic markets. Broadly, an allocation of around 20 per cent of total assets toward international equities can provide meaningful diversification benefits.
How do you see changing broking margins and volatile F&O volumes impacting your business? Also, talk about your expansion plans going forward?
The industry is clearly evolving, with regulatory changes aimed at improving market stability and encouraging more responsible participation in derivatives. In the near term, pressure on broking margins and volatility in F&O volumes can impact transaction-driven revenues across the industry. However, the opportunity today is much larger than pure broking. At Geojit, our focus has increasingly been on building a diversified financial services platform with a stronger emphasis on wealth management, investment products, advisory, and digital engagement. Going forward, our growth strategy is centred around deepening our wealth and investment platform businesses, expanding partnership-led models, and strengthening our international presence, while continuing to leverage technology to scale efficiently.
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