Where India’s Next Big Investing Opportunities Lie | Bazaar & Beyond

Vivek Ananth: 
Hello everyone, and welcome to another episode of Bazaar & Beyond, where we explore the world of finance, investing and markets to help you make smarter money decisions. I’m your host, Vivek Ananth. 

Today we’re joined by someone who has spent over three decades in Indian capital markets. He has seen multiple market cycles, built a reputation for long-term thinking, and has deep expertise in equity investing. Please welcome Taher Badshah, CIO of Invesco Asset Management India.  

Thank you, Taher, for joining us. 

Early Career and Market Surprises 

Vivek Ananth: 
You’ve spent over three decades in the investment management space. What are some of the biggest surprises or moments that truly shaped your journey? 

Taher Badshah: 
Thanks for having me. It’s been a rewarding journey. I started in the mid-1990s, around 1994–95, at a time when India was still recovering from a financial crisis and the rupee had just been devalued. The economy was opening up quickly to reforms, so I entered the markets at a very interesting turning point. 

Over the years, the dot-com crash, the 2007–08 global financial crisis, demonetisation and of course, the COVID-19 pandemic each brought very different kinds of shocks. What stands out for me is how resilient the markets have been, especially in India. The US took almost eight years to recover after the GFC, while India bounced back much faster. 

Overall, the journey has been filled with learning, surprises, and valuable cycles that shaped my understanding of markets. 

Investor Behaviour and Rising Maturity 

Vivek Ananth: 
How have you seen investor behaviour evolve over the years? 

Taher Badshah: 
Investor maturity has grown a lot. After demonetisation, instead of panic selling, people actually invested more. A younger, more digital and globally aware generation entered the market. 

During COVID, despite sharp corrections, very few investors redeemed. Vaccines helped sentiment, but the real change came from better financial awareness and growing confidence in India’s long-term story. 

How Invesco’s Investment Framework Adapts to Market Turbulence 

Vivek Ananth: 
Every fund house has an investment framework. How does Invesco adapt to disruption, volatility, or sudden sectoral shifts? 

Taher Badshah: 
Our framework was created in 2007 and has been refined over the years, especially after COVID, but the core philosophy hasn’t changed. We classify stocks into seven categories based on their business characteristics, financials and valuations: three growth-oriented and four value-oriented. 

This categorisation helps us adapt across cycles, whether it is COVID, demonetisation, global crises, or domestic policy shocks. If a business does not fit into any category, it usually means the investment idea is not strong enough. 

The framework ensures discipline, adaptability, and a structured way to identify opportunities across market conditions. 

AMC vs PMS: What Changes for a Fund Manager? 

Vivek Ananth: 
You’ve managed both PMS and mutual fund portfolios. How different are they from a fund manager’s point of view? 

Taher Badshah: 
PMS setups, historically, were traditionally small and less institutionalised. Mutual funds, on the other hand, have stronger research teams and better processes. 

Today, mutual funds can run focused, high-conviction portfolios similar to PMS but with better governance and risk controls. For example, our Focus 20 Fund holds only 20 stocks, backed by decades of tested processes and deep due diligence. 

Institutionalisation has helped mutual funds improve consistency and manage concentrated portfolios more effectively. 

Small-Cap Funds and Lumpsum Restrictions 

Vivek Ananth: 
Small-cap funds sometimes stop accepting lumpsum investments when valuations get stretched. How should investors interpret this? 

Taher Badshah: 
It’s important to look at the economy’s backdrop. Since 2019, both corporate and banking balance sheets have strengthened, which has helped small and mid-caps because they rely heavily on domestic growth. 

Valuations can be expensive at times, but 10–15% corrections often become good entry points.  We have consistently maintained a constructive stance on small and mid-caps. 

We encourage investors to use dips constructively rather than avoid the category. Long-term small-cap investors who deploy capital during corrections usually generate better outcomes than those who simply hold through cycles. 

Understanding Fund Categories: What Investors Often Miss 

Vivek Ananth: 
Is there a fund category that often gets overlooked? 

Taher Badshah: 
Yes, multi-asset funds. Historically, multi-asset meant equity and debt. Today, asset classes like global equities, gold, and silver offer meaningful diversification. Rotation between these asset classes, when done through a disciplined process, helps deliver healthy double-digit returns while keeping volatility low. 

We structure our multi-asset fund using passive exposure to each asset class and focus our effort on asset-class rotation. This keeps individual stock risk low and allows us to manage volatility effectively. 

It is a highly relevant category in today’s global environment. 

Does AUM Size Impact Fund Performance? 

Vivek Ananth: 
Does the size of a fund affect its ability to generate alpha? 

Taher Badshah: 
To a certain extent, yes. Each category has its limits. A small-cap fund becomes constrained far earlier than a flexi-cap or large-cap fund due to liquidity and stock-selection limitations. 

For example: 

• A small-cap fund above USD 4–5 billion becomes harder to manage. 

• A mid-cap fund faces constraints above USD 10 billion. 

• Large caps can sustain much larger sizes. 

Investors should be mindful of fund size, especially in small-cap, mid-cap, and flexi-cap categories. The good news is that India has enough well-sized, nimble funds across houses. 

Underappreciated Sectors and Themes 

Vivek Ananth: 
Which sectors do you think the market isn’t appreciating enough? 

Taher Badshah: 
Quick commerce is one. Despite the noise, the long-term potential is huge. 

The other is wealth management. India’s high-income population has grown sharply. The number of people earning more than ₹1 crore annually has risen from around 70,000 in 2019 to about 2.5 lakh today. This opens opportunities for scalable and high-margin wealth management platforms. 

Many of these companies start as small-caps and then move up the ladder. 

Market Metrics That Are Overrated 

Vivek Ananth: 
Is there a market metric that you think gets more attention than it deserves? 

Taher Badshah: 
Two, actually. 
1. Market-cap to GDP ratio – Market-cap to GDP isn’t very meaningful in a developing economy where many big companies aren’t listed. 

2. Discounted Cash Flow (DCF) – And DCF valuation, while academically strong, relies too much on assumptions. If your forecasts are off, the result becomes unreliable. 

Both can be more misleading than helpful when used blindly. 

AI and the Future of Investment Decision-Making 

Vivek Ananth: 
How do you see AI changing the investing world? 

Taher Badshah: 
AI will take over repetitive work like data extraction, model building and processing large amounts of information. That’s helpful because it lets analysts and fund managers spend more time on judgement and decision-making. 

But behavioural insights, management evaluation and portfolio sizing are still very human-driven. For now, AI is a great support tool, not a replacement. 

Book and Media Recommendations 

Vivek Ananth: 
Before we wrap up, any recommendations for our viewers? 

Taher Badshah: 
Sure. 

Books: 
• Seeking Wisdom by Peter Bevelin 
• Nexus by Yuval Harari 
• How Not to Invest by Barry Ritholtz 

Podcasts and Blogs: 
• Invest Like the Best on the Colossus platform 
• Selected articles from Enterprising Investor 

Vivek Ananth: 
Thank you so much for sharing your insights, Taher. 

Taher Badshah: 
My pleasure. Thank you for having me. 

Closing 

You’ve been listening to Bazaar & Beyond. Today’s conversation reminded us why long-term discipline, understanding cycles and following a consistent framework matter so much in investing. 
Stay safe and invest wisely. 

Disclaimer 

Investing in securities markets involves risks. Please read all scheme-related documents carefully before investing.