Private capex is set to pick up in 12 to 18 months: Julius Baer’s Ashish Gumashta

Private capex is set to pick up in the next 12 to 18 months, with promoters of businesses showing more confidence than ever before, according to Julius Baer India’s Executive Chairman Ashish Gumashta.

“Promoters have started embarking on capex, and over the last 12 months, the kind of confidence I've seen is unheard of. So, in the next 12 to 18 months, you may see some major capex expansion by Indian businesses,” he told Moneycontrol.

Also watch: Julius Baer on the year ahead for markets| Will India continue to outperform?

"People have started believing in the 10-year India story. That 10-year or a 15-year story was what was in doubt. Now, people have faith in the 10-year story. They say, 'look, whatever happens in the next 12 months, we are thinking for the next 10 years'. I think that is the big change I've seen," he said.

With credit growth taking off, Indian banks are placed in an interesting situation, according to him. The Indian banks see credit growth making a sharp rise but deposit growth going somewhat sluggish. “You have huge credit growth, about 17- 18 percent, but deposit growth isn't so much at around 10 percent. Fortunately, our banks are in a very strong position coming out of the last crisis, their balance sheets are strong,” Gomashta said.

His interactions with business promoters and families have led him to believe that domestic enterprises are doing well. “Everyone is thinking of expansion. So, my gut-feeling, from the clients that I meet, is that the situation is good and things are on track.”

Budget 2023

Gomashta is cautiously optimistic about the India growth story. The upcoming Budget holds no worries for him because he believes that the policy environment has largely been stable. His concerns were largely around global shocks particularly anything that could spin off from the US-China stand-off.

Also watch: Where to invest in 2023| Sandeep Tandon on top themes to be on in the new year

“We are dependent on China, because again, it's a huge import (supplier). It's our neighbour. Then US is a very big trading partner for India. I think that is something we need to keep a watch on,” he said.

“Right now the situation seems to be benefiting us but if the challenge grows, then there could have a currency war or some such development,” Gomashta said.

Julius Baer has a neutral forecast on crude and they don’t see prices flaring up. “What will make me very bullish on India is 15 percent to 20 percent fall in crude, then suddenly the whole game will change, raw material prices will fall. You know, we are price-led economy, so demand comes back and economic growth comes back,” said Gomashta.