Volatility is the entry point, not an enemy: Madhusudan Kela

New Delhi: Broad market annual returns are likely to moderate to 10-12%, said veteran investor Madhusudan Kela, tempering expectations for headline indices even as he remains constructive on India's long-term prospects.

With nominal growth moderating and sectoral dominance by mature industries, he sees benchmark gains settling into a more measured trajectory. The real alpha, he believes, will emerge from identifying "hidden gems" companies and themes, particularly around AI applications, that can enhance productivity and margins over time.

Volatility may dominate headlines, but it is conviction, not chaos, that builds wealth in Indian equities, he said at the summit.

Speaking on the topic, "Is Volatility A Buying Opportunity?", Kela said his core message is: "ignore the noise, back entrepreneurs with resilience, and let compounding do the heavy lifting".

The past few weeks have seen a whirlwind of events: the Budget, the India-US trade deal, sharp swings in gold and silver, and heightened equity volatility led by the sell-off in AI.

Kela views such phrases as an opportunity rather than a threat.

"This noise is what creates opportunity. This noise is not a distraction," he said, adding that differentiated returns are earned by standing apart from the crowd. "You rarely make money if you are with the crowd."

In Kela's assessment, Indian capital markets are structurally stronger than ever, backed by domestic capital and entrepreneurial depth. The challenge for investors is not predicting the next news event but maintaining discipline. As he puts it, "volatility is not the enemy, it is the entry point."

His investing framework revolves around identifying the "jockey", the promoter or leader at the helm. "Am I able to really identify someone who will be able to drive it and who will not get distracted?"

Kela praised India's retail investors, particularly mutual fund participants, who have steadily invested through systematic plans even when foreign institutional investors were net sellers. "They have been the real hero of this last bull run," he said. "Equity has evolved from a speculation-driven arena to a mainstream asset class, embraced for long-term wealth creation. At least 13 crore people in India believe that it is a real asset class and we want to invest for real long term," he said.

To underline the power of compounding, Kela cited an example. "If you save ₹11,000 per month in a respectable mutual fund, you can gain 100 crore after 50 years," he said, assuming long-term returns are similar to historical averages. The takeaway is faith-both in disciplined investing and in India's structural growth story. Unless a severe "black swan" event derails sentiment, he expects domestic flows to expand significantly over the next decade, irrespective of foreign buying or selling.

While acknowledging fears of job disruption in IT services, he drew parallels with earlier technological shifts. "Technology has never made life difficult for people in the last 50 years," he said.

He believes India's expanding Global Capability Centres could offset potential job losses in traditional IT outsourcing. He advised caution on IT stocks until earnings visibility improves.