INDIA BULLS

Introduction:
Once in a blue moon phenomena around the world – Bulls are running wild and people are
enjoying it. Before you make wild guesses the stock markets are having Bulls running all over
them in Developed and Developing countries alike. The stock market party is not confined to
Dalal Street. US, Germany , Japan and some other developed markets are also witnessing a
stunning rally. But the similarity with India ends there. For the first time since 2010, major
markets have reported higher earnings per share which analysts forecast may grow 15% this
year. In India, markets have surged despite earnings downgrades for the fifth year in a row.

Better earnings growth and dollar’s weakness against major currencies have driven global
market cap to a record $93.6 trillion on November 8. It is up 40%, or $26 trillion, since
January, the highest absolute gain since 2003 when Bloomberg began compiling data. Indian
market cap rose 42.6% to $2.23 trillion during the same period, the highest percentage gain
among top 10 markets.

With better balance sheets and higher market caps, key benchmark MSCI World index is at
20 times the trailing earnings, against a historical average of 17.

Indian Bulls’ strength is nowhere near the bulls running wild in the developed countries.
Market cap of Indian Stock exchanges is just 7.78% of the US stock markets. The top four
companies listed in the US have a total market cap that is higher than the entirety of the
Indian markets. The basic case for a global investor to invest in Indian markets is the benefit
that an exposure to emerging markets can provide. These are markets that grow at a high
rate, and offer opportunities that developed markets may not. But to a US investor, there is
a consistent stream of new businesses coming in as investment opportunities. US investor
has made mind boggling returns from Amazon, Apple and Google. Therefore, Indian equity is
attractive only when it offers something that a developed market would not.
What can NRI’s do?
Property market is at rock bottom. “Don’t wait to buy property. Buy property and then wait.’
This quote though sounding simple has a brilliant message stored in for Resident Indians
and Non-resident Indians. History has proven that property prices at prime locations have
doubled in all metro cities over a period of ten years. Need we say more?

Some banks are offering very innovative products where Non-residents are looking for
safety of principal amount with higher rate of interest as compared to their home countries
without worrying about exchange risk. This is a win-win situation for people planning to
retire and settle in India after a long innings outside India.

What can Resident Indians do?
Till the time Rupee is not fully convertible, Indian Investors best bet is Mutual funds in India.
And with huge surplus funds being made available by Indian investors in the hands of mutual
funds, too much money is following very few quality stocks. Recent listing of good
qualitative stocks and industry one being Insurance sector is a big positive for the Indian
stock market. But ‘Dilli door hain’ meaning it is still time for the Indian Stock markets to
mature in line with its global peers. There are stories of how Rs. 10,000/- invested say 15
years back in select stocks have given 500% and more returns. In the same way there are
stories of how the same Rs. 10,000/- invested in many stocks have turned to be paperless.
Insolvency and Bankruptcy Code, The Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, Black Money Act and Benami Transactions
Prohibition Act are at the initial stages of implementation. And its fruits will be available to
the future generation.
Hope the Bears are not listening and having enjoying winter slumber. Let our Indian Bulls
party all night (atleast upto the next elections).