Page 85 - Edelweiss India Conference 2022 FLIPBOOK

New Energy Digital Manufacturing Capital Markets Human Capital

Capital markets and domestic economy: A divergence
too far?

One of the unique aspects of the capital market cycle this time around has been the
divergence between economic momentum, and the access and raising of equity capital in
markets in general. This dichotomy should not hold for too long—with a mean reversal of
either one, sooner rather than later.

the pandemic capital market is unique—globally, in its looking beyond the immediate. But

investors’ willingness to take risk with capital.

Credit growth lags market's stellar performance

36
90 32

28
60
24 A stunning element
( % YoY) 30 20 ( % YoY) of the market shift

16
has been that the
0 12 largest businesses
8 have raised more
(30) 4 equity than debt in
Dec- 05 Dec- 09 Dec- 13 Dec- 17 Dec- 21 recent years
Nifty (% You) Aggregate credit growth - RHS

Source: CMIE, Bloomberg, Edelweiss Research

A stunning element of the market shift has been that the largest businesses have raised
more equity than debt in recent years. This underscores the vibrancy of the markets, and

While this could be mirroring the state of the market, which could easily slip, it does tell
what can be, and the markets’ capacity to support growth and capital, if the need arises.

historically, a gap in the markets. This has not gone away, but the scope of large raises and
the breath of niche business capital-raising in the current cycle suggest the markets have
moved a leg ahead of their previous avatar.

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