“…since 1990 when I started my career in the capital market, we have seen a complete evolution of the National Stock Exchange and the transformation of the Bombay Stock Exchange…indices have become like a barometer of how the economy and the stock market are doing,” he said in an interview with ET Now.
According to him, the main focus for long-term investors has never been to predict the exact level of market indicators, but to understand how economic growth compounds over time.
“We never guessed what the index would be but we always guessed how the economy could double at any given time.”
He explained that India’s economic structure has historically favored strong integration. With real GDP growth at around 7-8% and inflation also at similar levels in previous years, nominal GDP growth has often reached the mid-teens. The addition of an equity risk premium means that equity markets offer higher returns over the long term.
“…the median composition used to be about 20%, then about 15%, and now it’s 12% to 14%.”
He also highlighted a simple rule that is often used by investors to understand compounding.
“If it grows about 20%, it doubles in about four to four-and-a-half years.”
Over the past three decades, the most visible change has been the dramatic increase in investor participation. India now has more than 14 million unique investors, who have joined a larger segment of the markets over the past few years with technology, financial literacy, and improved access to markets.
Balasubramanian believes that as markets have evolved, investor behavior has also evolved.
“…before when the crisis hit, investors were skeptical about how things would turn out. Today there is no question of doubt…investors’ confidence and level of maturity is very high.”
Even so, rapid market corrections can cause anxiety, especially among new investors. However, he points out that Indian markets have historically shown resilience through multiple crises.
“India has always emerged as a big winner after every crisis.”
Despite the current global uncertainty and market volatility, he is confident about India’s long-term trajectory.
“The current turmoil may create volatility, but I believe India will emerge as a big winner in the global market.”
For investors, he says the message remains clear: focus on the long-term story of the Indian economy.
“Investors should continue to be highly optimistic about India’s growth story relative to the rest of the global market.”
