Can Rs 6.6 lakh crore in potential PSU divestments bring FPIs back to Indian markets? Axis Capital explains
Axis Capital says faster government divestments could expand India’s investable equity pool, ease valuation pressures and limit foreign outflows. A 15% reduction in government ownership could raise about Rs 6.6 lakh crore while supporting fiscal consolidation and increasing market liquidity.
India's equity market has experienced strong demand in recent years, with much of the investment meeting supply at high valuations, according to Axis Capital's report. The government's ownership of listed companies has increased to Rs44 lakh crore, but much of this supply has been concentrated in banks and non-banking financial companies.
Accelerating government divestments could help narrow the demand-supply imbalance, reduce pressure on foreign investors to exit, and address the underlying issue of excess demand for equities in the Indian market.
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