The recent selloff in Indian stock market was just a normal correction in a broader bull run, and globally, the political and economic shifts - particularly in the US - are creating ‘temporary turbulence’ but are unlikely to derail the broader trend of globalization, veteran investor Ramesh Damani said on March 24 during an interaction with CNBC-TV 18.
"The US market could go through a brief, dark period," Damani said while mentioning that the world navigates this uncertainty, the long-term trajectory of markets and globalisation stays intact.
America’s inward turn and global impact
Damani said that the 2024 US elections, with Donald Trump at the center, signalled a shift in America's global stance. "The world is not going left or right, but America is turning inward for the first time. And that has profound changes on the world. I feel the world is about to change," he said.
However, he emphasized that while globalization might be delayed, it cannot be denied. "The US arc works towards progress. Either Trump will change, or democracy and the people's aspirations will change. While we might be going through a very difficult period in the global economy, I don't think it is going to be a lasting change. Donald Trump and the MAGA crowd are in for a hard lesson on economics amid their measures in trying to tackle fears of America's manufacturing is being hollowed out," Ramesh Damani said.
A correction, not a reversal
On the prospects of India’s stock market, Damani remains bullish and sees recent corrections as part of a larger ongoing bull run that started in 2021. "The first correction in about five years was severe. But by their nature, they ought to be short, sharp, and swift - like they are in the current scenario. It is just a correction in the bull market, not the topping," said Damani.
He pointed out that even as markets fell, several individual stocks continued hitting all-time highs - something that typically doesn’t happen in a bear phase. Additionally, India Inc remains focused on expansion, growth, and improving margins, signalling economic strength.
Damani dismissed concerns about heavy selling by foreign investors (FIIs). "Anytime there is a transaction in the stock exchange, there is a buyer and a seller. So, when there's selling by FIIs, there is also someone buying," he said, highlighting that domestic investors are stepping in to absorb the outflows.
No easy money, no excessive leverage
For investors worried about volatility, Damani offered a pragmatic view. "There is no such thing as easy money on Dalal Street. All the veterans had warned that when the correction comes, people will panic." However, this as a normal, self-correcting mechanism of the market, he added. "Anytime valuations become excessive, people step in and sell—that creates a buying opportunity."
Damani’s key takeaway has been that there is no undue leverage in the financial system, and the government has exercised fiscal restraint, keeping money tight. "There is no reason to believe this is a long-lasting bear market," he said.
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