India’s financial markets have undergone a profound transformation over the past three decades, and according to Edelweiss Group co founder Rashesh Shah, the journey underscores a key lesson for entrepreneurs and investors alike long term opportunity often outweighs short term volatility.

Speaking at the Moneycontrol FiDEX 2026 Financial Distribution Expo, Shah reflected on his entrepreneurial journey and the broader evolution of India’s financial ecosystem. His remarks come at a time when India’s capital markets are witnessing deeper domestic participation and rising retail investment, trends that are reshaping how financial institutions operate and how businesses raise capital.

Shah pointed out that the early 1990s marked a turning point for India’s financial system following the country’s balance of payments crisis and subsequent economic reforms. Institutions such as the Securities and Exchange Board of India established in 1992, the National Stock Exchange launched in 1994, and the opening of the private sector to mutual funds and banks created a new architecture for India’s financial markets.

According to Shah, these structural changes gradually strengthened domestic capital formation and reduced India’s reliance on foreign investors for market liquidity. Over time, domestic investors and mutual funds have emerged as stabilising forces during periods of foreign capital outflows. The increasing ability of local investors to absorb selling pressure from overseas funds reflects a more resilient financial ecosystem.

The evolution of the financial system also coincided with the formation and growth of new financial institutions, including Edelweiss, which Shah co founded in the mid 1990s. He noted that the early years of the firm highlighted how business growth rarely follows a predictable path.

While the company initially planned modest revenue growth in its early years, external disruptions including financial sector stress and turbulence in the non banking finance space slowed expansion temporarily. However, the company eventually experienced sharp growth in subsequent years, illustrating how Indian businesses often experience uneven but powerful growth cycles.

Shah said this pattern mirrors India’s broader economic trajectory. Global shocks, geopolitical tensions, and domestic disruptions frequently create short term uncertainty in the market environment. Yet, when viewed across longer time horizons, the underlying economic growth remains significant.

To illustrate the power of long term compounding, Shah recalled that the benchmark index of the Bombay Stock Exchange stood near 680 when he began his career in 1989. Over the decades, the index has climbed to around 80000, demonstrating the scale of wealth creation that long term investors have experienced in Indian equities.

He argued that investors and entrepreneurs need what he described as a “bifocal vision” the ability to simultaneously navigate short term disruptions while maintaining focus on long term opportunities.

Beyond strategic thinking, Shah emphasised the importance of emotional discipline and financial resilience in navigating volatile markets. According to him, the psychological impact of market volatility often exceeds the actual financial damage caused by it.

For investors, adopting investment horizons of three to five years can help manage volatility. Entrepreneurs building businesses may require even longer cycles of five to eight years to realise meaningful growth. This long term orientation can help avoid reactionary decisions during market downturns.

Shah also highlighted the risks associated with excessive leverage, particularly in financial services. Businesses with high levels of borrowing often struggle to survive prolonged downturns because debt obligations force them to exit during periods of market stress.

Within Edelweiss, Shah said the firm evaluates its business units across four core dimensions. Employee engagement is viewed as a critical factor in financial services, where ethical standards and integrity are closely tied to organisational culture. Customer satisfaction is another key metric, measured through feedback and service experience indicators.

Financial robustness forms the third pillar, with strong emphasis placed on liquidity management, capital structure, and cash flow generation rather than purely accounting profits. The fourth dimension is risk management and governance, particularly important in sectors that handle client capital and operate under tight regulatory oversight.

Looking ahead, Shah believes technological change particularly artificial intelligence will significantly alter how financial advice and services are delivered. Digital platforms have already simplified transaction execution, and AI tools are expected to automate parts of investment advisory and financial planning.

However, Shah suggested that technology will augment rather than replace human advisers. Relationship managers will increasingly rely on AI tools, but their primary value will lie in understanding client needs, interpreting financial goals, and building trust.

This shift may push the financial services industry toward a more client centric model, where advisory solutions are tailored around individual financial needs rather than being driven by product distribution.