Decade of equities: When India took centre-stage

Friends, I have copied this article from moneycontrol.com, when I looked at this article I found something positive for our market… it summarize the same thoughts that I have…..

I am marking all important lines in RED Color, and you can find my comments on this article at the end of this post in GREEN color….

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A decade is a long time. Especially in equity markets. When 1999 ended, the world had just witnessing the burst of a dotcom bubble that, in hind sight, many people reckoned couldn’t have gotten more nonsensical. End of 2009, and we are being thrust out of yet another larger financial bubble (shows the optimitism that we are on thr verge of financial crises ending) that, when it burst last year, threatened to obliterate the very face of capitalism.

It goes to prove the legend, Warren Buffet’s, words, who once said, ‘Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.’ How many investors, though, burnt their fingers in the late 90s’ dotcom bubble and the euphoria over realty stocks back here in India between 2005 and 2007 remains to be ascertained.

But the overall story doesn’t change. Over the longer term, India’s benchmark Sensex — what with its forceful, violent corrections along the way — maintains its head up. Start 2000, and the Sensex hovered around the 5,000 mark. End of 2009, it’s above 17,000. Compare that with US stocks, and Wall Street has moved all over the place but remained exactly where it was a decade ago

Markets often smell things in advance, it is often said No wonder then that stock markets in China and India — the new superpowers of the east — headed up while their developed counterparts sensed something was going wrong with the world’s superpower, America, as it loaded up on its gargantuan debt by spending more than it earned, fought costly, bloody wars it was not winning, and implemented economic policies that defied both rationality and economics.

2009 resumption of bull market?????

Was the correction of 2008 just another — mega, as it may — blip for the Indian market machine, one that bummed it up but which it will shrug and move on? Billionaire investor Rakesh Jhunjhunwala believes so. The Indian Warren Buffett, as he is dubbed by the media, has often said the Indian economy, with its large savings, young working age populace and a clean financial system unlike the troublesome one in the west, “is in its teens”.

“I see no reason why — if Indian software exports grow by 10-15%, commodity prices hold at reasonable levels and we have good government policies — India cannot grow at double digits,” he told CNBC-TV18 in an interview in June. The Indian economy grew 7.9% last quarter when the developed nations strategise ways to fight out of the recession. India, Jhunjhunwala said, will continue to attract capital from the world because of its astounding growth.

“The fall from 21,000 to 7,500-8,000 for the index [in 2008] was just a correction in the longer-term bull market in India,” he said. “Actually, the first correction started in September 2001 because the real bottom the market made was post-September 11, 2001, and then the market went up to 3,500 and had a historic correction back in April 2003.”

A staggering four-and-a-half year bull market then saw the Sensex reach all-time highs of 21,000 in January 2008, just when the global financial crisis hit home. “Now, I do not think the Sensex will cross 21,000 in a straight line. We have to correct and we have to make a range and only then we can have the next move.”

‘India in midst of ‘something special’’

Another market veteran, Ramesh Damani, thinks India is in the midst of “something truly special”.

“This bull market in terms of how well it bounced back from lows is suggesting that there is something going on that is extraordinary in India. We are in the process of taking India from a trillion-dollar economy to not a 2-trillion dollar or a 3-trillion dollar economy but something far greater,” Damani told CNBC-TV18 recently. “Maybe in a generation, we will take a population from affliction to affluence, from poverty to prosperity, maybe we would go from 100 million people in the middle class right now to a billion people in the middle class and that has profound investment implications over various horizons.”

After the spectacular run seen in 2009, investors would be doing wishful thinking to expect the same pace of rise ahead, believes renowned fund manager Madhu Kela of Reliance MF. He, however, said now was a market in which stock pickers would shine. “Stock-specific, there are humongous opportunities. If one is right in predicting the Indian bull run, you can even today find companies, which are in the vicinity of Rs 5,000-15,000 crore market cap that could go up three-five times over the next few years,” he recently said

Damani says the idea now is to hunt for bargains where you can buy companies with the proverbial tri-factors: good management, good business and good value.

The market guru summed up the overall sentiment over the country nicely when he likened India of today to the America of the 50s: “You knew that [back then in America] the Korean War took place and the Vietnam War took place and the race riots took place but the index kept plodding higher over periods of time and if you bought the right companies at that time, you made an enormous amount of fortune by the time 2000 came around."

"So maybe we will see a lot of corrections during this way, riots in India, slippages and liquidity crisis but if you invest in the right kind of companies and the right kind of stocks, then probably there is a pot at the end of the rainbow that is waiting for investors.”

My Comments are here:

This article clearly shows the optimisms that we are on the verge of financial crises ending very soon.. but that may not be too fast…. Note that Indian market has moved from 500 levels in yr2000 to 1700 level in 2009.. and if we have a look at the US markets it is at same level as it was in yr2000… there is nothing like couplilng of Indian and US market…. I don’t believe in this coupling theory… we are far ahead of from the levels at which we were in 2000…but the US market is standing on the same levels today as well…… this article points towards the fact that market discounts a stocks future… if a stock has nothing in its balance sheets and still running up it means market is seeing its future value…. I have recommended ennore coke when there was nothing in its balance sheet,, but still it rises from 25 to 60Rs because market is looking at its future value… it has still long way to go from here…

RJ says…Indian Equity market bull run has just began… we have a very long long way to go from here as we are still in infant stage…there will be a continous FII Flow into our system…. one should be very stock specific…..as one of reader told me that every stock runs in this type of market… he/she can be wrong here…we have to be very very stock specific to get the supernormal profits….. madhu Kela and damani are emphasizing on bargain hunt now as there a load of stocks still available cheap……

Readers, take your own call please….