The last few month's upheavals in the stock market have left investors much worried about their investments and many believe that the market is witnessing a bear phase as stocks across sectors are falling.
However, India's top two market analysts believe otherwise. They think the domestic market is not in a bearish phase instead we are witnessing a mid-bull market correction. And also, they are not too much worried about the valuations as they think that eventually, the growth cycle is what matters the most in the market.
"Given that India is at the beginning of a potentially large and long growth cycle, I am quite okay with valuations. They are not extended or too cheap. At this point in the market cycle what matters is the growth cycle rather than valuations," said Morgan Stanley's head of India research Ridham Desai, in an interview with the Economic Times.
"We are at the mid-cycle stage; the early pickings are done when the valuation re-rates in anticipation of higher growth. The next stage is likely driven by growth rather than multiple expansion. This is like a mid-bull market type of correction," he added.
Another market veteran Madhusudan Kela said in an interview with ET Now that India has been among the best performing market in the last one to ten years.
Kela said the concerns over current factors such as inflation and geopolitical tensions are partially or significantly discounted by the market.
Kela also added that the Indian currency has been among the most resilient currencies in the world even though the dollar index rose by nearly 14 percent in the last one year while the Indian currency only depreciated by 6-7 percent. This happened despite an unprecedented amount of FII outflow.
It is indicative of the resilience and the strength of the market as well as the country, Kela said.
Kela agreed that it is an uncertain period because of the Ukraine war and the soaring inflation. Nevertheless, Kela believes India is in a bull market.
"We have had a very strong market since March 2020. If I take a medium, long-term perspective, this is a correction in a bull market. In some sectors and some stocks, you can argue that there is a resemblance to a bear market. But on a broader market, I would say it is a correction," Kela told ET Now.
Kela added that there are many variables and it is impossible to precisely predict which variable will move where. He highlighted that the balance sheets of Indian corporates and Indian households are in a much stronger shape. So, the best strategy is to buy strong companies using this volatility and spread it over to the next 3-6 months, he said.
Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.
