Is more than 30,000 Sensex well within reach?
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The man ringing the bell this time around is none other than Aditya Puri, the CEO of HDFC Bank, one of India's most profitable and respected financial institutions. In a must read interview to Morgan Stanley, Mr Puri has let out a stern warning that investors miss the vibrancy of India at their own peril. He argues that even if we do not solve our problems, we can grow at 7.5%-8%, just the way we are doing currently. Now here is the interesting part. He is miffed that most people are missing the enormous transformation that is taking place. The transformation that will turn the current growth rates into a very strong growth rate of 10%. Each of the evils plaguing India viz. infrastructure, subsidies and fiscal deficits are indeed being tackled and will yield the desired results as per him.
Furthermore, most of us judge India on the basis of how its cities are vis-a-vis those of other countries like China. Mr Puri believes it would be a big mistake to judge India like this. He has urged people to go to the hinterlands and look at the tremendous prosperity that is flourishing there. "I see a new India equivalent to the existing India coming up", he is believed to have said. People focusing on a six month view will certainly miss the India growth story as per him.
Clearly, it is difficult not to get influenced by Mr. Puri's infectious optimism. Especially when most of his arguments are soaked in irrefutable logic. Another interesting aspect is that the high growth, if at all it happens, cannot leave India's equity markets untouched. More so because unlike say China, most of the growth here will be driven by its entrepreneurs. Thus, while investors are worried over how soon the Sensex can touch 30k, if one believes in Mr Puri's arguments, an index number much higher than that does look well within reach.
Do you think Mr Puri's is being overly optimistic or you agree with his view points? Share your comments with us or post your views on facebook page.
01:28 | Chart of the day | |
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Yields on US treasuries have generated positive returns and investors have mistakenly taken that as a positive sign. But what they are not realizing is that these yields aren't high enough when compared to expected inflation. In fact, much of the Treasury yield curve rests in the negative territory when compared to expected future inflation. And bond prices have already reached very high levels. Moreover, the US Fed deliberately keeping interest rates low is not helping matters either. And the creditworthiness of the Fed has been increasingly questioned in recent times given that it has amassed massive debt. Thus, investors will have a heavy price to pay if they do not grasp the dynamics of this situation soon enough.
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But what we have seen in the years following the crisis clearly points that the causes have not been dealt with at all. If you look at the US for instance, it has gone out of its way to avoid pain by injecting steroids in the form of quantitative easing. Effectively, it has only delayed the pain. Worse still, the causes have aggravated even further. And not just the US, look at what's going on in Europe. So many economies there are drowning in debt. Many more bailouts will be announced. Go further east and you will see an old patriarch still reeling under the consequences of massive natural and nuclear disasters.
And for the moment, even the emerging economies have paled a bit. A high interest rate regime has slowed down manufacturing in China. Even India is dealing with similar problems.
Given such a grim scenario, it seems like there's more trouble in the offing. A long list of world-renowned economists and investors such as Nouriel Roubini, Jim Rogers, Mark Mobius and others have started ringing the alarm bell. The global economy seems to be at the tipping point of yet another major global economic crisis. But when the storm will strike is still anybody's guess.
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04:56 | Today's investing mantra |
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33 Responses to "Is more than 30,000 Sensex well within reach?"
arun
Jun 16, 2011there is no doubt india is progressing at its high pace but still corruption becomes the hinderance in our progress but i agree with MR PURI that indian market definately goes on upside as thing looks to be controlled in next four to five years
S.V.B.VENKATA RAMANA
Jun 14, 2011Mr Aditya puri is realsitic and practical, in this country there is no adequate coverage on news disclosing the ground reality on day to day basis.Good monssons foar the past one decade coupled with reduction of urban unemployment and thanks to programs like NREGA there is lot of progress . The growth story in india should not be looked through the prism of few urban based industries and soft skill industry alone.The growth is conspicuosly visible in FMCG, AUTO AND TELECOM industries due to the nature of industry , products , consumption style and recruitment trends,
Where as in the manufacturing growth is not visible due to traditional style of functioning. Mr purai as a banker has clearly observed the ground perception and i agree with him. Yes 30000 is definitely possible by the end of 2013.
manohar sharma
Jun 10, 2011This country though surrounded by enemies and internally have a great chance to implode yet there are people who think we will become what Mr Puri think.Everything in the life does not run on human logic but is controlled by logic that comes out as a reality from the People's DEEDS.I think that our hinterlands will script a new future and we will BECOME.
Babu Philipose
Jun 5, 2011Puri's comments are realistic, and India will have a successful growth for the next 20 years without any problem.
shome suvra
Jun 4, 2011Money from U.S. bond market owing to low interest rate will continue to come in India. Hedge funds will do well even if the market is temporarily bearish.Long term investment in mutual funds are needed which should be actively managed with greater alpha. Good fundamentals are possible for defensive stocks. when the market comes back to normalcy from being overvalued more FII investment is possible as commodity(gold,silver and oil) prices are high to have got to switch to them.
sethu
Jun 3, 2011i am happy if his wishes come true.this will come true if corruption in our country is eliminated.
George
Jun 3, 2011Well, if you consider the real inflation ( what I mean, the real inflationary pressures due to which the comman man is suffering maximum to pull on their daily lives mainly arisen from the unaccounted black money floated ov er to India during the last 5 to 10 years), no doubt the Sensex must have crossed index 30,000 level. But investors of domestic as well as foreign are afraid of put their money in the stock stream because of recent upheavals of blatant corruptions sitting on the zenith of every walk of life in India, and many other internal political and caste based reasons the economic barrow meters could not show the correct index level. But in real terms the index level is much more than the 30000 level as an imaginary conception!
athmanathan.s.
Jun 3, 2011Sir, I wish Mr.Aditya Puri's faith in the Indian economy is shared by one and all. However one swallow does not make a summer. Can he empirically prove how many rural areas he has covered to arrive at his conclusion. Our agricultural lands have been spoiled by over application of urea which is heavily subsidised. Once the people are shown some luxuries in the form of freebies it is difficult to wean them away from them.
In Tamil Nadu for example, 20 kilos of rice are given free. Electricity is the cheapest in India for households. The vote bank politics has ensured that this pampering of voters and pandering to the whims of the masses has resulted in a deep deficit of more than a lakh crore for the state government.
Disparities in income and wealth have been widening every day. Fat salaries are disbursed to government servants while Mr.Montek Singh Ahluwalia is sure that Rs.20 is sufficient for a day to survive which shows his deep rooted desire to check subsidies but for that sake he cannot afford to earn a bad name as not being practical.
Day by day the greed of the political and bureaucratic class is coming to light. Mr.Manmohan Singh is shown in poor light as he is tied to the wishes of his political master.
India is not fated to be a developed country what with Pak and China teaming together to conspire against India.
And lastly yoga guru Ramdev and Anna Hazare are in loggerheads which is not good for the Lokpal Bill.
Congress can no longer hope to capture power with their shenanigans getting wild by the day. There is no viable national party to hold its ranks together and presenting a credible opposition. But India will still run its show as some good meaning citizens are still god fearing.
Adi Daruwalla
Jun 3, 2011Mr. Puri, is overtly optimistic. Its not bad to be optimistic but Mr. Puri should manage his own bank first before going to rest of India. There are branches where people are not able to answer queries of customers, phones are off the hook, as the staff cannot manage their work load and even answer calls (so phones off the hook)at HDFC bank. Can Mr. Puri look at his own back offices and the disconnect between back office and branches before deciding on India
jitendra mehta
Jul 1, 2011yes index will definately cross 30000 within 2015.there are lots of scripts available at cheaper price.