The Indian market is just catching up with its global peers after years of underperformance, said Shankar Sharma, Founder, G Quants, at the Business Standard BFSI Insight Summit 2022 held in Mumbai on Thursday.
Every equity market across the globe – from Japan to Vietnam and Zimbabwe – has and will have its day, and the Indian market is having its day right now, Sharma said.
India, he noted, has a number of factors working in its favour, especially in a post-Covid world where the trust in China and Chinese companies has gone down considerably.
“We are the good boys of the world and people still like us. People trust India and Indians a lot more than they trust China and the Chinese. And that is a big factor in the post-Covid world," said Sharma.
According to the market expert, from a historical perspective, if one looks at the period between 2010, when the world was emerging from the global financial crisis (GFC), and March 2020, the markets have given abysmal returns.
The Sensex in January 2008 was at around 16,000 levels and hit 37,000 levels by February 2020. The index surged 50 percent over a period of nearly 13 years, he pointed.
“In dollar terms, Indian equities have given a negative return for almost 12 – 13 years prior to Covid in 2020. Post-Covid, the returns have been good. This is nothing but a correction after a long period of abysmal returns. Markets are playing a cyclical catch-up. Markets are always cyclical; we romanticise the good part and ignore the bad part,” Sharma said.
He believes that economic growth in India will slow down next year as it battles factors like the crisis in Ukraine as well as local macro challenges. The Indian economy is likely to grow at 6 percent in fiscal 2023-24 (FY24) even as global growth remains modest, he said.
In the upcoming Budget in February, Sharma said, the government should not tinker around the capital gains tax structure either by increasing the long-term capital gains tax (LTCG) or the tenure of holding the asset(s).