“The capex cycle is few months away,” said Parthasarathi Mukherjee, managing director and chief executive, Lakshmi Vilas Bank.
Bankers said the rights issues by Vodafone Idea and Bharti Airtel would see significant investments coming in from overseas by the existing promoters. Vodafone and the Birlas are expected to invest Rs 20,000 crore in the rights issue, which aims to raise Rs 25,000 crore from existing shareholders. “We can expect another $3-billion investment into India from Vodafone and Birla due to this rights issue as many existing shareholders have decided not to participate as they incurred huge losses due to recent share price fall,” said an investment banker.
The Bharti Airtel rights issue will also see participation from its Singapore-based investor GIC of up to $700 million. Among financial firms, the State Bank of India is planning to launch a qualified institutional placement of shares, which is expected to raise $3 billion, and the majority is expected from overseas investors. The date has not been decided.
So, what is driving the optimism, that too at a time when the index of industrial production contracted for a second month in a row in February, and with manufacturing, consumer non-durables, capital goods, and infrastructure and construction goods growing slower?
Analysts said even though the Indian economy is expected to slow to 7.2 per cent in fiscal 2020, it is still the best bet for foreign investors. “Despite the uncertainty over the elections, investors are quite sure that the next government will continue to be investor friendly and encourage foreign investment,” said the head of a financial services firm. In 2018, Naspers invested $1 billion in new age firms in India and plans to deploy more funds in the current year. The private equities are the most bullish lot — acquiring office buildings and stakes in technology companies.