Indian investors are talking about the India Growth story but “Are they really prepared for it”? With the kind of stress we have seen and negative news flown over few years, we are happy with the current market rally. If we see the longer period horizon we have a lot to catch up.
Investors are not realising the power of mandate we got this time. During Mid 80’s in 1984, we had seen single party winning with the majority with 404 seats and this time it’s the second best win with 282 seats. Market during that time rallied from around 250 levels on the sensex to over 500 levels in a matter of 18 months. Mind you we did not see any correction in those 18 months. I am not saying the same will happen but the point is we are coming out from the low base and bad economic cycle; things can surprise on the positive side with this clear mandate. Being a global market now, we may see in between sharp corrections by FIIs selling (which was not the case in 80s) but the recovery will also be expected to be sharp.
Last time it was Rajiv Gandhi, who was basically a pilot who came into power with no experience in Govt. This time we have a proven leader, who has fought a hard battle to be here. Therefore expect positive change. We are seeing the signs of revival already in the economy but economic turnaround will be quicker than we had thought. To that extent equity and debt markets are in a hurry.
Risk is not the valuations yet and with time passing we may see earnings kicking in with the upgrade coming in for the companies and the economy. The combination of earning growth and PE rerating is the best phase for any market. Don’t remain underinvested in the rally and use dips to add equity for the long term.
Rahul Jain, joined IMMPL in 2005 for equity operations and today heads equity research. He streamlined the processes and execution of our equity division. He then moved to equity trading and now heading the research . With over 8 years of experience in the capital markets and MBA in finance, his calls on the markets are fairly well researched. He understands the risks and knitty gritty of the trades done for the clients.Tweet