Prashant Khemka, founder of White Oak Capital Group. Well, manages oodles of money, has a gem fund, and therefore no better person to talk about both the global and local factors combined than him. Prashant, good morning. Thank you so much for joining in on PM Modi's 75th birthday and, well, 11 years into his post at the helm of affairs. I think the country's traveled a long way. What is your optimism for the times ahead?
Good morning, Nas. Thanks, Mo, thanks for having me here, particularly on this day. Let me use your platform to wish our prime minister a very happy birthday and may India continue to rise. The discussion that you were just having, I think it is positive. It is indicating that some kind of a thaw, more than a thaw, progress is being made. And as we discussed before, and you know, given the nature of negotiations that the Trump administration has had with other countries this year, in the preceding months, it seemed, you know, that it was very much a negotiating tactic. As talks were progressing, likes to amp up the pressure, and that's why the additional tariff and whatnot. And it seems like it's de-escalating, and over the coming days, weeks or months, we should have a deal between the two countries, would be my expectation at this point in time.
Prashant, hi, Tamana here, and such a pleasure to speak with you today. You know, what we're trying to do is, while we talk about, of course, the birthday celebrations etc., is to also talk about the impact of governance and policy and what it has done, say, for the capital market. So I want you to talk a little bit about that, the view towards capital markets, the wider participation of Indians in capital markets as a measure for creating wealth and the change that you have seen.
Absolutely, it's been an accelerated journey, I would say, over the last decade. The journey began obviously many decades ago, but it has picked up pace over the last 10 years, as we've all seen how the asset management industry, which was, you know, I don't even remember what it was exactly. I do remember in 2004 it was just equity AUM of Indian asset management companies total about $4 billion, and it's today over $500 billion, and vast majority of it has been raised over the last decade. Yeah, there's a long way to go, but it's great to see that retail investors have much greater confidence in the industry, in the asset management or mutual fund funds that are being offered, and in great part the policies that the government and the regulator have encouraged in this regard has helped deepen the penetration of mutual funds in the country and rising in participation by retail investors.
Most certainly. Prashant, what's the outlook ahead from a market's perspective? Simply because let's assume that we don't know the effect on the economy. Let's assume that with the 7.8 number in quarter one, and even if quarter two were to wilt a bit, hopefully the rate cuts, income tax cuts that have happened plus the GST measures will bring about a boost to consumption and thereby to the economy. Will the markets follow that, or do the markets need something else for either global capital to work alongside domestic capital for taking the markets higher? And should the markets go higher, or are they well valued right now?
You always believe markets are reasonably valued and fairly valued in aggregate and reflect these near-term macroeconomic developments. I think to the extent that the markets were, you know, rattled, and it wasn't like the markets pulled back big time or anything, but to some extent there was concern in different corners amongst global investors as well that whereas till six months ago India was thought of as an alternative to China and the China plus one story, and to the extent that that was aiding economic growth, can that take a hit? Can that have a bump in the road with this additional tariffs going from 25 to 50? And that concern should get addressed once, you know, we have this hopefully positive outcome from the discussions going on. The positive side of this temporary hiccup is that the government has further, you know, pushed the pedal on and made the resolve, it seems, to push further with reforms. Some of those in form of GST cut we have already seen materialize, and hopefully we'll see many more to come. The next budget, while it's six months away or something like that, it's good that it's six months away. There'll be a lot of time to work on some significant reforms, and I'm very hopeful that this acted as some form of catalyst and would galvanize further momentum behind reforms.
Prashant, in terms of where we go from here. So now possibly a double support coming in. You have GST which will give you consumption boost from the 22nd onwards. Frankly though, that would be maybe a temporary blip, right? Because if everyone's going to buy something new, they're not going to buy an AC and a TV and a fridge and a car. So, and that will also be a postponed decision possibly. Second is the tariff concern easing. Do you see that giving wings to the markets and also easing some concerns that FPIs may have had?
