Is the bull market already past its prime? That's the big question that market experts are trying to answer. Market veterans Ramesh Damani, N Jayakumar and Raamdeo Agarwal had a special discussion on the sidelines of the Economic Forum for India at LSE and tried to gauge the direction of the Indian bull market.
Below is verbatim transcript of the discussion:
Damani: Budgets are path breaking events whether we like them or not but they also lead to bull markets being born. You have been watching this market for 25-30 years as I have been. You have seen a number of bull markets go through each bull market tells us a story about India. What is this bull market telling us?
Agrawal: I have lived 4 bull markets – 1985, 1992, 2000, 2007, it comes in a 7-8 year time series. So, we are overdue for a bull market. Every bull market brings completely new theme. Funny thing is that you get to know about a theme only after the bull market is over. So, all these titles, of course some of them are very obvious like 2000 was dot com boom.
This time the kind of theme which is happening what I can feel is that people are messed up with dot com, they messed up with leverage, I think this time boom about the quality. As Buffett says that let me know where I am going to die, I will not go there. So, the world wants to go into quality and growth (QG). So, QG is the place where Bull Run is happening right now so far. It could go out of hand.
Damani: It could or is it already out of hand in terms of the quality stocks?
Agrawal: It is already out of hand in some of the stocks. So, as the Bull Run picks up it will obviously be growth but this time it is quality and growth. It could be like Nifty 50 of 70's in the US or some crazy stuff going to happen.
Damani: Bull markets tell us a theme; I want your thoughts on that.
Jayakumar: The biggest and most dangerous trend today is that because the power of information is so aggressive and so immediate that people are tending to build self fulfilling trades. So, the guy who has bought bosch and many of them will be people from this room, young 25 and 27 year old kids walking in and saying what is a bear market, I have only seen bull market. Well, the derivative is supposed to be a derivative of the underlying and in this case the derivative actually leads the underlying. A lot of people have not seen bull markets or bear markets more than two three years and they tend top believe that their last trade of last week is as good enough to get them more money which bring in—so, the self fulfilling prophecy in the world is to my mind the most dangerous thing so, we need to be conscious of the fact that quality will be chased but at the same time as other investors have told us sometimes at valuations like this you need to give up quality at a price. So, will you have the same industry where bosch quotes at 85 times and another auto ancillary in India quotes at 12 times, you need to take that call.
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