Excerpts of CNBC-TV18’s exclusive interview with Shankar Sharma:
Q: Two months ago, month and a half ago you had put a report saying that if you do not get onto the bus now you will miss the bus, but did you expect 17,000 to come so quickly, I think that was when the market was at 15,000? A: Yes absolutely, in fact, I think August 14 was the day when we put out our note saying that this is it and two months from now, maybe three months from now nobody will even remember that something called subprime ever happened. I think most of us, even including people in New York, are beginning to forget that ever such problem exists at all. Our view is that India is headed for a market situation in the next six months time wherein we will see index levels get taken out successively. I would be surprised if the index doesn’t hit between 25,000 and 30,000 in the next six-nine months time.
Q: So you are saying that the speed of this move of six days from 16,000 to 17,000 does not come as a surprise to you? A: Not at all, in fact I have been on a road show in the US and that is exactly the message that we put out. This was a road show, which began on August 15. So during that period was extremely difficult to get clients to listen to a bull call. Q: Were you the lone bull at that time? A: That is what most of our clients told us that you are probably mad to be saying what you are saying. But we were very convinced about that call. In fact, I have a bet with a CIO of a large US fund, my bet has been that global equities, US equities will be on absolute tear. My view is very simple, we think India has headed to P/E multiples of between 25 and 35 times in the next nine months’ time. China trades at 40-45 times earnings and that market does not look like selling off. So there is no reason why India should be considered overvalued at 17-18-19 times wherever it is. Q: So subprime is now just a bad cut of stake on your plate, nothing else? A: This is inelegant but the sub prime was just a pimple on the butt.
Q: What you think has unshackled this market, has it been huge gush of money or do you think this time around these 1,000 points or these 2,000 points have truly been global in nature? A: They have been global. You see, markets are interesting situations, markets throw you all kinds of curve balls, red herrings. Our view was simple that a sub prime issue is a classical red herring it was a small part of the global economy but then the entire global economy was tanking because of this small problem. Most interestingly the best performing market outside of China in the month of August, at the height of subprime was actually the US markets, they actually went up. To my mind, that price action told me that if the market which has caused the whole world to collapse itself has gone up, why are people in India weeping out of sorrow. That was a big confirmation of what our basic theme was that global equity, India in particular will be on an absolute tear in the next six-nine months time. |
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