Not too late to make money in the market, say mavens

If you are afraid that you missed out on the stock market rally, which has the Sensex at 20,000 once again, then you can take heart from the fact that some of the finest market minds believe that it is not too late to make money in the market.

As long as you invest for the long-term, Indian markets are expected to outperform other asset classes and provide a means for significant wealth creation, according to the views of a panel
that includes Rakesh Jhunjhunwala, Madhusudan Kela and Ridham Desai.

They were speaking at an event organised by Bloomberg UTV and Nirmal Bang.

The sectors that are expected to do well include pharma and agriculture-related sectors.

“We are positive on pharma. Though we do not expect the same kind of returns that the sector has seen over the recent past, we expect it to do very well,” said Madhusudan Kela, chief investment strategist at Reliance Capital.

“Companies which are related to agriculture will be good investment bets,” said Rakesh Jhunjhunwala, one of India’s biggest investors. He drew attention to the tremendous scope for improvement in output, with India’s land producing less on a per unit basis than Pakistan or Bangladesh.

Gold has also been matching equities step for step over the last few months in reaching new highs, but there seemed no doubt in the minds of the panelists that equities would be the more rewarding asset class.

“My wife buys gold, I buy equities,” said Jhunjhunwala.

The growth in India will continue and we must not remain pessimistic about our execution capabilities, said Ridham Desai, managing director, Morgan Stanley India.

He pointed out how a few years ago, an economist predicted infrastructure spending to be at around 6% of gross domestic product (GDP) by 2010. “Though this was seen as optimistic then, we are at around 8% now,” he said.

Growth will be accompanied by a flood of savings hitting the equity market, said Kela. “Considering the growth in GDP, if even a small amount is channelised into equities, the capital involved would be huge,” he said.

Meanwhile, the biggest risk to potential upsides remains any spurt in oil prices. “India is still dependant on oil imports. This could have a negative impact if crude spikes,” Kela said.

This maybe offset in the days ahead by new oil finds eventually, said Jhunjhunwala. “God will not be so partial as to give so much oil in the deserts of Arabia and leave nothing for the deserts of Rajasthan,” he said.

Although the experts shied away from predicting a number for the Sensex, a sense of the optimism they shared could be seen from their reaction to a query suggesting the Sensex would be at 40,000 in 10 years’ time.

“Don’t be so pessimistic,” said Jhunjhunwala. All panelists studiously avoided stock tips. Investing regularly through an expert fund manager is the best way to reap the rewards of equity investment, they said.