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Market to see a well-sustained bull run: Experts

Dalal Street is celebrating Diwali in style but are there more legs to this market rally. Veterans Ramesh Damani, Member of BSE, Samir Arora, Founder & Fund Manager of Helios Capital, and Manish Chokhani, Chairman, TPG Growth India, discuss their expectations from Samvat 2071.

According to Damani, the markets are currently in a firm ‘bull grip’ and he is optimistic on the trend to continue for the next few Diwalis.

Unfazed by the highs the market can achieve, Damani feels one should rather focus on how low a bull market can go. “Index can go fairly high. The thing is that it should not have more than 10 percent correction in my view,” he added.

Samir Arora too thinks the rally is big and in for a longer duration. However, he does not want to compartmentalize the expected gains on the index to 20 percent or 30 percent.

According to Manish Chokhani, the current Indian environment is neither like 1991 nor 2003, but it is a seminal moment as the country has “decisively moved to right of centre in terms of economic policymaking”.

Below is the transcript of Ramesh Damani, Samir Arora and Manish Chokhani’s interview with Latha Venkatesh on CNBC-TV18.

Q: Your take…

Damani: We are firmly on a bull market grip, bull market, like I have often mentioned the Japanese bull market lasted 25 years. We do not know how this will last but all the portents are good. Let me take you through the key data points. Globally interest rates in India are going to go down, inflation is going to come down, growth is going to accelerate whereas globally interest rates are headed higher, inflation is – they are trying to get it higher and growth is anemic everywhere in the world except India and we are now floating on a global liquidity of oil — cheap oil price is one of the greatest beneficiaries that India will have. So the portents are extremely good plus we have a new government in Delhi that is enthused with the power of change, power of new ideas. So I would be optimistic not just Diwali but perhaps for the next few Diwalis.

Q: Is it 30 percent from 2071 to 2072 Samvat?

Damani: That is always difficult to say. The trick in the bull market is to see how low it can go, not to worry about the high. The highs can be 50 percent, can be 25 percent. It doesn’t matter. In the context of a bull market we know the index can go up double, triple. So we are looking at that from a base of 17,000-18,000. Index can go fairly high. The thing is that it should not have more than 10 percent correction perhaps in my view.

Q: What is your sense? Is the global environment as clement as Mr Damani is making it out to be? Yes, cheap oil for now but that also could be because there is risk aversion as well. We get these bouts of risk aversion. Will global capital be kind, are we going to continue to see a clement global environment towards Indian equities?

Arora: Global environment for India will be very positive, particularly in the last few weeks where cynics were thinking that Mr. Modi will only do this and no more. We had always bet it on the point that Mr. Modi, if you are betting on him, you have to bet for six months and start getting nervous in the seventh and eight month, but with all the new initiatives he has taken, which according to me were well expected, by reasonably clued in individual into the Indian markets but this reinforcement of the fact that this is beyond just the global environment. Global environment is very conducive but the big picture is that foreigners have still not invested enough in India or taken an active enough bet this year.

This year foreign flows into India are lower than what they were last year. In absolute we are up USD 13-14 billion in terms of FII flows into equity and last year were more like USD 19-20 billion and this is after a big event which was well telegraphed and still people refused to believe. So, the foreign flows into India are nothing but in addition now we believe that we have turned the corner in terms of Indian sentiment also. So, I think the rally is big and is going to be long-term but do not box three of us in as to whether it will be in this Diwali 30 percent or 20 percent. It will be big overall and for long duration of time, beyond a point doesn’t matter whether everything happens in the next three months or in the next six months or even in the next one year.

Q: There is headline hunting in trying to find out what is the next Samavat going to be like but I take your overall message that we are on the cusp of something big but describe to me this something big if you can. Are we in 1991 moment when all the parameters changed for us? In one press conference the license raj was rendered illegal or are we in that 2003 moment when we shook off six years of perhaps downturn and got on to a higher business cycle but not necessarily a political economic cycle?

Chokhani: There are two parts – one the global cycle is fairly scary in some sense because the force of gravity, which is interest rates, and the world are artificial and all this money pumping is akin to the Y2K kind of boom which artificially lifted every asset class in the world but that is extremely supportive for a country like India unless the world completely collapses and gets into deflation. So, oil till USD 80-75 per bbl is great but if oil is USD 50 per bbl that means the world is in a bad shape. Having said all of that we expect the world will muddle along, central banks will keep pumping money back, you will get these corrections globally.

The Indian environment does not look like 1991 where you had to reform under pressure, or 2003 where money just gushed in mindlessly and lifted lot of bad quality stocks. It is a seminal moment for India because this country has decisively in my view moved to right of centre in terms of economic policymaking.


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