India Outlook

Yesterday I attended a conference on wealth management at the Grand Hyatt in Mumbai. It was part of the event Extravaganza organised by Shorex Ltd. A lot of the talk at the conference was focussed on the India growth story. There is no doubt in the minds of these finance professionals that India is on a growth path for the next 30-40 years. Since we are just at the beginning of this growth cycle, it is a very good time to invest in the Indian stocks.

How can we say if it is the right time to invest now? Well, looking at the growth of the Indian economy for 30 - 40 years, we can expect the stock market to grow for atleast about 15 years.

How do we judge if the market is overvalued or not? What about the PE ratios? Currently the Indian market has a PE ratio of about 18. We know that the economy is growing at about 9 or 9.5%. The inflation is about 4-5%. In nominal terms we thus have a growth of about 14%. This applies to the entire Indian economy. Now, the corporate sector is at the forefront of this growth. Hence, the PE of 18 is entirely reasonable. We can definitely see a increase in the PE levels from here as the sentiment in the market improves, but that is another story. At the current PE, we can easily expect a 20% growth from the Indian stock market for the next 15 years. If the PE increases to above 30, it might be a good time to come out of the market and wait for it to come down again, as historically the PE has gone above these levels only during the scam times when markets were overvalued.

Overall the sentiment was in line with my feeling. We can see a flat market or it might go down (giving more buying opportunities), but the long term growth is simply positive. Keep investing, stay invested.

 

 

India-growth Story  |   Ways4Forex |  women-of-21stCentury|  Ways2commodities|  Ways2insurance| Ways2trade  |  Ways2Finance  | Ways2fitness |Ways2health 

Gold: Give Yourself The Edge Of Bullion

Forex eBook: Read and Learn

You g|et paid to  read the contents of RupeeMail