“India is in a sweet spot right now with corporate earnings to GDP at 4.8%, the best in 16 years, and both large and mid-sized companies have become more efficient, boosting profitability even without much valuation expansion,” she said.
According to Nakhate, “This is India’s chance to become, sooner, the third largest economy,” having just moved past the fourth position. But for that to happen, private sector investment must pick up meaningfully. While early signs are visible in electronics and pharma, she stated private capex is still “coming in a few sectors by a few private companies” and needs to broaden.
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On the other hand, government capex has slowed down even below budget levels, with a larger share of spending now going toward subsidies—33% versus 25% earlier, which may drive consumption but lacks a long-term growth multiplier.
Despite global uncertainty, India is navigating external pressures confidently. Nakhate highlighted the role of active trade talks with the US, saying she is “very confident” the ongoing negotiations will ease concerns around supply chain restrictions and bolster sectors like electronics and semiconductors.
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She pointed to strong domestic flows as a key reason for India’s market resilience. With systematic investment plans (SIPs) clocking $3 billion a month and over 1.3 crore new retail investors joining the NSE in just 15 months, local investors are supporting the markets even as foreign portfolio investment (FPI) flows remain patchy.
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“Many people used to say India has huge valuations, but the profit earnings have lived up to that expectation,” she added, suggesting foreign investors may be underappreciating India’s fundamentals.
Nakhate also highlighted India’s rising importance in global capital markets, with the country contributing 16% of global initial public offerings (IPOs) and raising $88 billion through IPOs, blocks, and qualified institutional placement (QIPs) in 2024-25 (FY25). Private equity firms have played a big role in driving this shift by backing mature businesses ready for the public markets.
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Looking ahead, she sees private credit and infrastructure as major focus areas. With strong executed assets and rising demand for logistics and capex funding, Nakhate believes India can attract more multi-strategy and private credit funds to fuel the next stage of growth.
For the entire interview, watch the accompanying video
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