India is going to be easily the best and among the top two performing markets in the world, in the next two to five years, said Shankar Sharma, founder, GQuant Investech. In an interview with Business Standard, Sharma noted that every market has its day and the Indian market, too, is having its day, underpinned by having done better than the rest of the world during a difficult 12-month period.
"While India has outperformed global peers over the last one-two year, it was not always the case. We had a lost decade before that. It is important to understand that cycles of this kind are durable either way. So if you go into a bear market, on a relative basis, it will take a while for large economies to come back. And India’s still a fairly large economy by any standards. When it turns and goes up into an upcycle, it is like a supertanker. You cannot just turn them around and make them bad," explained Sharma.
Sharma pointed out that despite the recent outperformance, Indian equity markets are playing catch-up with global markets. Between January 2008 and February 2020, the Sensex gained around 16,000 points (from 21,000 to 37,000) over a period of nearly 13 years. That is an annualised CAGR return of 4-5 percent in rupee terms, he informed.
In dollar terms, the returns were slightly negative, added the market expert. "However, Indian markets have delivered fabulous returns since Covid (March 2020), after delivering abysmal returns, in dollar terms, for nearly 12-13 years. We have to understand that it's a cyclical catch-up," he said.
Regarding geopolitical tensions, Sharma further noted that the Russia-Ukraine crisis seems to be fully priced in by the markets. We know that European demand has been affected and it'll take a while to come by, he said, adding that as regards our borders, I don't think the stock markets get affected if the confrontations don't escalate into major skirmishes.
According to him, one of the biggest positives for India is that it is the 'good boy' of the world. People may do business with China, but they don't like it for various reasons, he said.
Overall, it is hard to find a country that is ticking all the boxes as India is, highlighted Sharma.