B O O M or bust

I feel market is on the brink of surprising us on the upside. You all may be surprised to hear that I am talking of an upside even after most of the analysts & economists on the street are skeptical both about global & local markets. The reason behind my optimism is that Central Banks across the world are very cautious & so any big catastrophe should not happen in near future. 2008 crisis happened when everyone was relaxed. Nobody had thought about the sudden collapse of the so called BIG financial institutions. Everyone on street is talking about expensive valuations of India vis a vis other emerging markets. I feel that India will always command higher valuations because of its high ROE, ROI & Low debt-equity ratio. Management quality is far more superior & transparent as compared to others. The other thing is that nobody is grand-father of the market & so cannot determine the exact valuation.

Macro picture looks much better than what it was six months back. Monsoon has been going very well along with a good spread across the country. This will boost rural economy as 60% of the population is dependent on agriculture & in turn will spur consumption. Still this story is been under-estimated by most of the analysts & is going to surprise everyone on the upside. This year we are going to have maximum “Mahurat” days for weeding in the last decade & this will have a big impact on Consumption story in India. History tells us that whenever anything is going against the trend, everyone would be skeptical initially. But then when people see that markets are not going down and earnings are reasonable or earnings are going up then at last everybody joins the party.