Why this bull market is better than previous ones : Udayan Mukherjee, Moneycontrol

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Why this bull market is better than previous ones

The only reason for the market to correct right now is to catch its breath, before it takes off again, as there is nothing negative looking around the corner that could stand still the equity market bull run. if and when it happens, is not beyond believe to be a massive one.

it is encouraging to see that the market, while it makes new highs almost every other day, is punishing stocks with unsound fundamentals. An example of troubled  JP Associates, which is down nearly 60 percent this year, while the Sensex and the Nifty are up over 25 percent odd.

This tells you the rally has not been a non selective one. In the past you would see many rallies, which have often meant anything high beta has actually outperformed the Nifty. That has not happened this time around. So many infra stocks are down in the last three months. Real estate as a sector has got smashed up and any stocks, without mentioning names, which owed its past gains to political patronage of some kind or has not be able to fix their balance sheet despite this kind of buoyant equity market are getting punished. Now the right kind of stocks are getting pick up by investors.

India growth numbers, gross domestic product (GDP) numbers were not very good but if compared with the international markets, they are relatively much better and the fact of the matter is that in the long run it is profits of companies and the growth in profits of companies, which will dictate the type of returns one make in the equity markets. So, I would strongly recommend people to look at equities as an asset class. I can see whole bunch of reasons and when one look back at September to today on macro front, one do not know what sort of reforms or what sort of issues -- there have been issues on political front, corruption front, but over the years India has proved far more resilient and I do see scope for investing in equities.

Why should an Investor Invest in Equity Fund?

In the short run of course there are sentimental reasons and that is why there is some selling pressure, but long-term investors, I can see a whole bunch of positives in the market as follow: 

Macro indicators : Improving macro indicators leading to better economic growth prospects and improved market Sentiments.

New Government: Stable government with clearly articulated policy framework and pro-growth approach will lead to enhanced economic activity in India.

Investment opportunities: Potential opportunities arising from structural trends like home improvement, e-commerce, imports substitution & manufacturing exports, defense, education etc.

(1) we are at the top of the interest rate cycle, we are seeing that interest rates are going to come downwards and whenever that happens it is typically very good for corporate

 (2) valuations have now dropped below the long-term average so it is not like dirt cheap, but it is certainly a time when one should consider investing in Indian equities

 (3) internationally also we are getting supported on two fronts; one, commodity prices have fallen sharply and as a result of that one has seen the impact on oil prices etc so the subsidies that Indian government had on petrol and diesel, apart from their increasing prices on one side the subsidies have dropped because international prices have also dropped and simultaneously one is seeing that the quantitative easing by US and Japan is continuing so one is seeing flows continuing to come into the market.

 Therefore, whole bunch of reasons why I would recommend that people do look at equity markets.

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