As markets rise, it’s common to see investors come & ask whether this is the peak? Usually, it’s not a peak when investors are asking whether it’s a peak.
It’s a peak when everyone is highly convinced that prosperity is going to be forever, markets are bound to infinitely rise, common people selling their jewelery, real estate, fixed deposits to arrange money & invest into stock market, when everyone’s taking about that hot stock which can double in next month, etc.
Right now, I don’t see a single sign of any of the above when I interact with investors & public in general.
There’s no euphoria or buying frenzy at current all time highs and this is a good indicator for the bull run to continue.
Also, here are some of the macro factors which indicates towards the fact that the bull run is here to stay:
1. Let’s first talk about the major economies. USA is kind of saturated on growth, Europe is comfortable with leisure & what they have, China is killing it’s own corporates, which leaves us to hungry India & high growth opportunities.
2. Even though Nifty is at all time highs, it’s constituents like Reliance, TCS, Infosys are down 10-30% from their peaks. The day these start rising again, Nifty rally will further get fuel to run up.
3. While everyone went printing money out of thin air after Covid, India took the prudent approach of printing only what was needed. Thanks to this, India’s inflation is lower than both US & UK.
4. Not only low inflation, India’s debt to market cap (a leading indicator of bubble) is also quite low compared to it’s peers.
This makes the Fundamentals of Indian economy stronger.
5. Our markets are at one of the reasonably trading ones across they globe. We’re still trading at Nifty PE of ~19x. Usually the bull run fades around 22-24 PE. Hence, still a lot of steam left on the earnings part.
6. Crude, which we’re 2nd largest importer in the world is stable at ~$70/barrel. I expect it to be at these levels. The thesis changes only if surpasses ~$100 (which is less likely in next 2-3 years).
7. Rates are at peak. I expect a set of rate cuts coming in next 3-9 months. As & when it happens, a fresh flow of liquidity will come into risk assets like equities & we may see sharp inflows into equities pushing the stock prices further up.
There are many other reasons which indicates that this bull run is here to stay.
2021-2022 was a teaser.
What we’re watching in 2023 is just a trailer.
Picture abhi baaki hai mere dost.
Only those who hold onto equities will reap the maximum benefits of bull run.
Massive money is yet to be made & is around the corner.
