“I’m not oozing with optimism, but yes — I’m positively biased,” Garre told ET Now. “We’re seeing supportive macros: lower inflation, policy push, liquidity improvement, and stronger consumption — all of which can drive steady market gains through the rest of this year.”
Earnings rerating likely from December quarter
Garre expects the December 2025 quarter to mark an inflection point in India’s earnings trajectory.
“We’ve seen some earnings pushed out from Q2 because of GST-related disruptions,” he said. “Now, with liquidity easing and credit growth improving, Q3 should deliver better earnings visibility.”
He added that most of the negatives — from global tariffs to geopolitical risk — are already priced in, meaning any positive surprise could re-ignite FII interest.
“If global headwinds soften, you’ll see that reflected both in FII flows and currency stability,” he said.
IPO factory shows market maturity, not excess
India’s booming IPO market — which Garre famously dubbed the “IPO Factory” — is not a sign of speculative excess, but of a maturing capital market, he said.“Public markets are a vital funding source. If you don’t have public participation, you limit future value creation,” Garre explained.
India saw over $35 billion worth of IPOs in the past 20 months, half of which involved stake sales by private equity funds or promoters.
“This is healthy,” Garre said. “Capital raised finds its way back into entrepreneurship. It’s value creation, not value extraction.”
He also noted that the quality of IPOs has improved, and public investors now play a critical role in India’s growth cycle.
Foreign investors may return as macro stabilizes
While FIIs have been net sellers over the past year, Garre expects that trend to pause — if not reverse — in 2025.“I don’t see major outflows ahead. Over the next 6–12 months, FII flows should stabilize,” he said.
He attributes potential inflows to three key factors:
- Macro stability,
- Fading risk of earnings downgrades, and
- Reduced currency depreciation risk.
“If these align, global investors will re-engage. India remains one of the most resilient emerging markets,” Garre added.
AI & tech: Missed the first wave, but infra is the play
India may have missed the early “foundation model” phase of AI, Garre admitted, but the next opportunity lies in agentic AI — startups building solutions that ride on global large language models (LLMs).
“We discovered over 150 Indian startups working on agentic AI,” he said. “Many will get acquired, some will scale independently. But the real investable theme for now is AI infrastructure — data centres, connectivity, and digital infra.”
Garre expects the AI infra story to gain traction over the next 3–4 years, potentially opening new avenues for investors as these companies mature.
Promoter stake sales are not a red flag
Addressing concerns over large promoter stake sales — like Whirlpool reducing its holding — Garre said this is part of a normal capital market evolution.
“Stake sales show confidence in market depth,” he said. “When large funds or MNCs offload shares and markets absorb them, it’s a positive sign.”
He emphasized that India’s private markets remain small and tightly funded. Hence, secondary market exits via IPOs and stake sales recycle capital back into new ventures, fueling economic growth.
“Every exit creates space for the next entrepreneur. That’s how a vibrant capital market sustains itself,” Garre noted.
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