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The Equitymaster Research Digest

The 'Grandmother' of All Bull Markets Is Coming
Dec 7, 2016

  • India's 'golden period' is still ahead of it
  • How to play the long-term India growth story
  • How the story could get derailed

If 'Big Bull' Rakesh Jhunjhunwala thinks the 'mother of all bull markets' is ahead of us, Ridham Desai has gone a step further.

The strategist from Morgan Stanley has made it clear that the 'grandmother of bull markets is coming'. The next 10-15 years will be a 'golden period' for India:

  • If 2003-2009 was the mother of all bull markets, I call this the grandmother of all bull markets. And we are just at the beginning. So we've really not seen the movie as yet. It's happening right now.

While we don't share Ridham's wild optimism, we do think the next 10-15 years have the potential to be quite good for Indian stocks.

My colleague Tanushree believes that financial stocks, especially on the retail side, are one of the best ways to profit from this trend.

The rationale is simple. India has arguably the lowest household debt-to-GDP ratio of any significant economy. Here's Tanushree:

  • One of the key Megatrend tailwinds that we have highlighted in The India Letter is the potential rise in household credit to GDP. Even discounting for the fact that Indian households are good savers and have a low propensity to take credit, the potential for penetration of credit in India looks huge. More so when compared to the developed economies in Asia. So irrespective of the direction of interest rates here on, the demand for credit at the retail level will remain strong. And financial companies catering to this space will remain in a sweet spot.
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