We believe that investors make non-linear returns in equities by investing in pockets where the rate of growth is higher. For this to happen, there are two precursors, and the non-linearity increases when both happen in tandem.
One, a low base is a great starting point as it sets the context for a higher rate of growth. Second, a change in the cycle which creates macro-economic tailwinds for the growth adds additional levers for growth.
India is at the cusp of this transition as our GDP growth continues to expand. This is significant to take note, as this is happening post a 10-year period of low growth. During these transitions, investors tend to under-estimate the longevity of this growth. In this snippet, we highlight what this means and how we want to position our risk exposures in these pockets.