$25 bn waiting to enter Indian pvt market amid global meltdown: Zerodha's Kamath

Online broking firm Zerodha's co-founder Nithin Kamath voiced his concern over the sharp fall in the stock prices of Big Tech companies such as Apple, Microsoft, Google parent Alphabet, and other tech- heavy firms across the globe, calling the market movement "crazy" and almost like dot-com boom.

However, taking India into context, Kamath, via a series of tweets, explained how the country has "weathered the storm" mostly because not many such companies are listed and many private ones raised a lot of money last year.

Kamath's comments come amid the extremely volatile situation of global markets with stocks tumbling so far this month due to factors such as monetary tightening by major central banks and a slowdown in economic growth.

Noting the trend in terms of movement in Indian bourses, Kamath further stated, "While listed Indian high growth tech stocks too have fallen quite a bit, they are very few and hence haven't had a large impact on the rest of the markets. Indian private markets got lucky with all the money that got diverted from China to India last year."

He also mentioned that globally, India still has a lot of interest given our demographics, population on mobile and internet, and expected GDP growth.

"There is a lot of money waiting to enter Indian private markets, $25b billion is what I am told," he added. However, he also said that Foreign Institutional Investors (FIIs) are pulling out money from public markets doesn't add up.

This said, Kamath also hopes that there is some correction in employee expectations in India, especially tech, product management, etc. "It is ridiculous that start-ups have to raise millions of dollars to cover employee costs just to be able to launch a minimum viable product," he added.

Elaborating on the same, Kamath said that it baffles him how quickly the expectations changed from growth at all costs to generating free cash flows to survive the next 2 to 3 years since raising funds might be tougher. "It is almost impossible for businesses to quickly adapt, especially the larger ones."

The other issue that he pointed out is that ESOPs given over the last 3 years will mostly be out of money and employee net worth would have taken large haircuts. This could affect the morale of many, which will make it even harder for those running the business, he warned.

On funding start-ups to cover the bare minimum, Kamath also opined that founders need to oversell the growth prospects and target market size to investors. "This leads to setting goals, which aren't achievable and the business not being resilient or sustainable or profitable to weather storms like what we are seeing now globally."

Meanwhile, on Monday, the S&P 500 ended below 4,000 for the first time since late March 2021 and the Nasdaq dropped more than 4 per cent in a selloff led by mega-cap growth shares as investors grew more concerned about rising interest rates.

The Nasdaq closed at its lowest level since November 2020. Apple shares dropped 3.3 per cent and were the biggest weight on the Nasdaq and the S&P 500. Microsoft Corp dropped 3.7 per cent and Tesla Inc fell 9.1 per cent.

On the other hand, the Indian stock market's benchmark Sensex was trading flat on Tuesday dragged by heavy selling pressure in the metal and consumer durables stocks. The 30 stock S&P BSE Sensex was trading 30.62 points or 0.06 per cent down at 54,440.05 points at 10:00 am. The broader Nifty 50 of the National Stock Exchange was trading 19.55 points or 0.12 per cent down at 16,282.30 points.