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Indusion Insights: 1H2016

With the first half of 2016 now in the rear view mirror, it is safe to say that the one word that can
be unanimously agreed on to describe the past six months is ‘turbulent’. The Indian equity markets saw a sharp fall in the first quarter, dipping nearly 12% at its lowest in February before posting a sharp recovery in the following months, buoyed largely by positive government action and hopes of a good monsoon.

At the beginning of the year, we had noted a few key trends that would be of significance into the

year. The issues driven by poor asset quality in India’s banking system have significantly come to the fore and are driving several changes in the sector including a strong interest in the asset reconstruction space and a shift of interest towards NBFCs. Financial inclusion remains a key theme as demonstrated by the stellar performance of micro finance companies.

A weak and volatile global macro backdrop and supportive regulatory changes within the country have only served to intensify new business interest in these areas. On the other hand, the payment bank model has lost some of its initial charm with 3 of the original 11 licensees dropping plans to build businesses in the space citing intense competition and unfavourable economics.

On a broader level, the Indian economy is increasingly being spoken of as a bright spot in an otherwise gloomy global scenario and, political noise aside, the government seems to be making the right moves to boost this perception and drive growth. A slew of significant FDI reforms announced near the end of the second quarter have served to, at least initially, boost sentiment even as global markets went into a tizzy over the surprise outcome of UK’s referendum on exiting the EU. India’s projected growth rate of 7.6% for FY2017 (World Bank) is the key indicator driving a relative positive outlook for the country.

Notably, the Indian Digital & E-Commerce space has seen an incredible turn in sentiment over the past six months. The impact of slowing funding has been exacerbated by a few headline missteps such as Flipkart’s withdrawal of offers to graduating students from leading b-schools in the country. Several erstwhile ‘hot’ areas such as on-demand grocery and food tech, among others, have gone completely out of favour. However, other spaces seem to be filling the gap with a surge in interest in FinTech.

Looking ahead, concerns still remain on the investment cycle needing to pick up in the country and key developments that will be closely tracked will include the developments on GST, the impact of 7th pay commission on consumer demand and global volatility in the backdrop of Brexit.

On a more granular level, especially in terms of the recruitment scenario, we expect that the broader trend of retreating multinationals will continue in the foreseeable future with the gaps in the market being opportunistically filled up by domestic companies.

For a recap of market trends, recruitment trends and the hiring outlook for our practice areas, read on.

Read the full report