For the second consecutive year, Kotak Securities was voted India’s best equities sales firm in Institutional Investor’s All-India Sales Team.
The Mumbai-based firm held onto its title in a year that saw many of last year’s top-ranked firms fall to the competition. Motilal Oswal Securities, which last year didn’t crack the top ten, claimed the No. 2 spot in this year’s ranking. Meanwhile, last year’s second-place firm, Credit Suisse, fell to seventh place.
The reshuffling of the All-India Sales Team comes in the midst of a strong growth cycle for India’s economy, according to India research analysts interviewed by Institutional Investor. They say the outlook for investing in the region is generally positive, which means sales teams have been met with growing interest from clients.
“Overall investors’ outlook is positive with more formalization of the economy, stronger banking system, and improving fiscal situation,” Credit Suisse analyst Anubhav Aggarwal wrote via email. India’s government has been implementing regulations to stabilize its GDP in recent years, including the new GST, or Goods and Services Tax, an indirect tax which replaced a number of former taxes on goods and services. Under the GST tax code, taxes are levied at every point of sale.
The regulations have been a boon to investor sentiment toward the country, according to analysts. The say India’s economy has stabilized but is continuing to grow. “India is entering the productive growth phase of the macro cycle – a phase marked by further improvement in growth while macro stability remains in check,” Chetan Ahya, an analyst at Morgan Stanley, wrote in an email.
But more regulations, especially when it comes to monetary easing, are not likely, according to Ahya’s colleague, Derrick Kam.
“Against the backdrop of accelerating growth and a gradual rise in headline inflation, we believe the room for further monetary easing appears limited,” Kam explained in an email.
Still, investors are taking an interest in the country, inclduing international investors who have taken note of the Indian economy’s positive trajectory, according to Ahya.
“Investors have generally taken a positive view of India’s overall structural growth story, which is being reflected in strong trailing foreign direct and portfolio inflows,” Ahya said. However, Bernstein analyst Venugopal Garre countered that a positive growth story in the economy makes stock picking more challenging.
“Despite the issues in the current year, markets have been at elevated levels, supported largely by strong liquidity,” he said. “This has made bottom-up fundamental stock picking more challenging.”
The All-India Sales Team is a part of the larger All-India Research Team survey. Institutional Investor received 257 responses from buy-side analysts and money managers at 157 firms that collectively manage an estimated $147 billion in Indian equities.
This year, CLSA ranked third, moving up one notch from 2016 and ousting last year’s bronze medalist, Morgan Stanley, which tumbled to tenth place.
Spark Capital, which ranked fourth, and Emkay Global Financial Services, which ranked fifth, rounded out the top five.