Week before last the looming political storm almost took the market for a ride as the stocks nosedived. I find it fascinating to watch the same analysts fluctuating alternately between optimism and pessimism as the goes on a roller coaster.
One cannot blame them because they cannot be seen as singing different tunes when obviously the markets are dictating otherwise. And mind you they are earning breads from giving their opinions on the market apart from tendering to respective high net-worth individuals.
In times such as these when the indications point to what is euphemistically called the ‘Indian Growth Story’ yet short-term turbulences make us nervous, we turn to sage advice from the stalwarts like Rakesh Jhunjhunwala.
On August 30, he spoke about his understanding of India’s future to an elite audience at IIT, Mumbai. Here is a brief of what he said there.
According to him, the US economy will slow down in near future because of the current credit crisis and that will affect the global equity markets including India’s. But Jhunjhunwala says that after a short lull, the Indian equity market will bounce back because of certain important factors.
Topping that is the real GDP growth of India. In the first quarter of current fiscal (Q1/07-08) it has been 9.3%, which is spectacular because it has come on the high base 9.6% of the same quarter last year (Q1/06-07).
Jhunjhunwala feels there are more reasons why India will continue to grow. His major takes are:
- Large pool of skilled people,
- Favourable demographics,
- Domestic consumption-led growth,
- Increased productivity.
- Corporate sector growing faster than the unorganized sector.
- The withdrawal of reservations for small scale industry may result in the closing down of small firms, but it will also benefit the larger companies.
Looking at them closely, it seems a fair possibility that India’s growth story is here to stay barring minor hiccups now and then. If that is true, it makes imminent sense to accumulate promising stocks at every decline so as to reap handsome gains say 7 to 10 years down the line.
What do you say..!!